Most of us know and understand the value of life insurance for providing financially for our loved ones. Life insurance ensures that your family will be able to pay the mortgage, continue education, and maintain their standard of living. But beyond the practical basics, life insurance also provides peace of mind for you family members, lifting a burden and providing space and time for them to grieve and begin the healing process after a tragic event. When to comes to calculating your life insurance face amount, how you do factor in the emotional and psychological needs of your life insurance beneficiary?
How Much Insurance Do You Need?
Life insurance is often used to replace the income of a breadwinner. The key question then, is how much insurance is needed to replace that income? Different financial advisors come from various schools of thought when answering that question. Some use basic rules of thumb, such as seven to ten times your income, (1) while others use a financial calculator to factor in additional resources and calculate the exact amount of life insurance to buy. But do these methods capture the true needs of your family?
Consider Your Family’s Needs
Before you crunch any numbers, you should take the time to think about the psychological and emotional needs of your surviving spouse and children. If your tragic demise were to occur, they would be devastated and need time to grieve, heal, and regroup from the trauma. While you will never stop missing a loved one, you eventually learn how to go one without them, but it takes time to grasp the impact of the loss. (2) The life insurance benefit you provide your family with should be sufficient enough to buy them that time.
No one wants to picture their family in such a state of mourning, but their misfortune is the precise reason you are buying that policy. Your sensitivity to the challenges they will face will help you determine how much money they will need.
Here are three benefits your life insurance will provide for you family’s emotional and psychological needs:
1. Time Together
First of all, your children will be without you, one of the two most important adults in their lives. You don't want them to “lose” their other adult - your surviving spouse - because he or she has to go back to work right away. Your life insurance policy should provide enough money so your spouse can afford to spend more time with your children and help them work through the bereavement process.
2. Peace of Mind For Your Spouse
Next, you have the needs of your spouse. For many people, losing a life partner is like losing an arm. They feel handicapped and incomplete. Some people can rebound quicker than others, but everybody needs time to absorb their new reality and learn how to live their new normal. They shouldn't feel compelled to remarry sooner than they are ready, simply because the household needs an additional income.
3. Breathing Room For A Fresh Start
Finally, you have to be open to the potential need for your family to start afresh. The death of a loved one can cause many people to take part in serious soul-searching. Your spouse and children may need specialized therapy or healing and growth activities. Maybe a vacation or a family bonding adventure will help them move forward. They might even need to relocate to a new community for a fresh start.
Now that you have the emotional and psychological needs of your family in mind, you can calculate how much life insurance to purchase to meet those needs. These are some of the dramatic but real issues you should think through when you prepare your family for your untimely death. You should certainly discuss them with your spouse and together determine what your family will need. If you feel you need extra guidance to come up with the right amount for your policy, or if you would like to further discuss the emotional and psychological impact your death may have on your family, contact me. I am here to help.