No matter how young or old you are or how much you earn every month, you should invest in life insurance. Unfortunately, many people don’t understand the importance of being covered. Note that being under-insured is better than being totally unprotected.
Not having adequate cover can lead to financial troubles if you’re ever in an accident or fall sick suddenly. According to financial experts, Americans in their 20s and 30s are the most vulnerable age group to being uninsured. That’s the time when you should purchase adequate insurance to protect your wealth.
How to calculate the cost of life insurance?
Even if you’re willing to invest in life insurance, you’ll wonder how much you should actually spend on life insurance. The general rule is to calculate long-term financial obligations and calculate the value of assets. The answer you get should be filled by the cost of life insurance. But it becomes difficult to determine what to include in the calculations. Here are some tips that can help you.
Multiply monthly wages by 10
It’s an old rule, but many experts still recommend it. With the current economic condition and rising interest rates, it’s somewhat outdated. Note that both and your spouse must be insured even if you don’t earn. That’s because if the person who doesn’t earn dies, you’ll have to find someone that does what the deceased did for free. That’s not something you can ask from anyone.
Consider $100,000 for education
Expenses for education are a significant component when calculating the cost of life insurance if you have children. This aspect adds another layer to multiply the income by 10.
Take a detailed look at your finances
After understanding your individual financial condition, you should delve deep. It’s time to take into account debt, income, mortgage, and education.
– Add up all the debts, leaving your mortgage along with a rough estimate of your funeral expense.
– Determine the number of years your family would be dependent on you and multiply the yearly income by that number.
– Find out the amount you’ll need to pay off your mortgage.
– Finally, calculate the cost of sending your children for higher education.
This formula is comprehensive, but it doesn’t consider the insurance coverage or savings you have at present.
Find the accurate cost of life insurance
Your last step is to find out the cost of life insurance. For this, you must calculate your financial obligations and subtract your liquid assets from the value. Find out the values of the following and add them:
– Annual salary
– Mortgage balance
– Other debts
– Future expenses such as higher studies abroad
– If you don’t work, you’ll have to include the costs of replacing the services that you provide.
After receiving the figure, subtract your liquid assets, which include:
– Current savings
– Existing funds
– Present life insurance
Consider the cost of life insurance as a component of the overall financial plan rather than planning it in isolation.
There are companies that work on collecting and maintaining credit information of consumers. These are known as credit reporting agencies (CRAs). There are three such major CRAs in the country, namely Equifax, Experian, and TransUnion. Apart from these, there are other smaller-scale agencies too that specialize at the job. If you’re worried about “where to get my credit score?,” the larger CRAs are the most reliable bets.
These major CRAs obtain information from companies that you hold business and transactions with. People or companies that lend you money regularly report to these CRAs on your repaying status. There is also detailed information on the amount you are indebted and whether you have ever defaulted on your payments. Aside from the reports obtained from lenders, these companies also tally your general records based on certain other aspects. Some of these aspects are your public records from the local and state judiciary. These include your tax records and bankruptcy information. This information makes up an important chunk of your credit score and its report.
Equifax
Present in 24 countries, Equifax is an agency that offers consumers protection against identity theft and credit fraudulence. They also sell credit reports and credit monitoring assistance to businesses.
Experian
Experian started off in London and is now a trusted agency in 39 different countries. It provides you with a credit score, credit report, and even credit tracker on subscription. The agency uses FICO 8 system of credit score calculation. Experian was a part of Forbes’ “World’s Most Innovative Companies” in 2018.
TransUnion
Based across 30 countries with a database of over 1 billion consumers, TransUnion is another CRA giant. The agency, like the other ones, will provide you with your credit score and your credit reports. In case you decide to freeze your TransUnion credit report, it will also go the extra mile to notify Equifax and Experian, which frankly is a big help especially in case of identity theft and credit fraud.
So, the next time you are sat wondering “where to get my credit score?,” think of these three giants that provide you with an annual credit score and credit report for free once each year. However, if you are looking for more frequent updates, you can subscribe to their services and receive your monthly updates.
Did you know that you have more than a single credit score? Agencies calculate your credit score based on the data in your credit reports. If you are wondering, “where to get my credit score?,” there are three main credit reporting agencies. These can have different credit scores for you if your information on each of their credit reports is different. Also, these agencies charge a fee to reveal your credit score.
Recently, it has become easier to track and get hold of your credit score without paying any fees. You can get it from your credit card company, your loan provider, and even from a non-profit counselor. Here are a few tips you can use to check your score.