How much insurance?

Discussion in 'General Insurance Agent Discussions' started by James, Nov 30, 2006.

  1. James
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    James Guru

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    Obviously in several other threads this is a point that some don't agree on. Just how much life insurance is needed how do you present or calculate the need? IÂ’m referring to the first time you work with a family or individual but IÂ’m going to ask for the obvious, a family of four, two parents and two children (lets make the children 2 and 5, a young family).

    Personally I don't use a calculator; I break out the old trusty yellow pad and do a simple replacement of income or however the client wants to do it. What each client wants or desires is all over the board. I figure this is going to be a 2-3 visit method at best but have done it in 1 visit.

    This family is middle class, lets say 75 grand a year, and husband brings home 40 grand a year as a photographer for lets say Olan Mills. Wife is a Case Manager (Social Worker) that brings home 35 grand a year. Husband has 50 grand life policy paid for by OM and wife has 70 grand life policy paid for by the local hospital that she is employed by. No need for Health, wife has that via Hospital at a price you canÂ’t touch that is rich in benefits.

    They have two vehicles, one is paid for and one is brand new at a 400 monthly payment. House, they have lived in their home for about 5 years and their mortgage payment is around 1,000 for a 150 grand home (this is base on TN in the Knoxville area so if the price of a home is much higher then change the formula). I assuming they place at least 10% down on the home so they have no equity and still have 25 years to pay.

    LetÂ’s assume they both invest 4% for the last 5 years in their Roth or 401 which half is by employer. LetÂ’s also give them a rainy day fund of about 5 grand saved in an interest bearing savings account at their bank. Yet though they are average on spending and credit cards, so that would give this couple about 15 grand in debt on a mix of credit cards and loans at their credit union. We also going to assume they take one major vacation a year, at a cost of 4-6 grand (?).

    So their average take home would be $6,250.00 minus taxes, which at 15% plus other employment deductions, lets just say 20%, so their take home is right around 5 grand, cost of living is running about 4 grand, yet they have little left over! TheyÂ’re both good members of their church and donate on average 6% of take home pay.

    Now feel free to add or correct my assumptions, this is totally off the top of my head! Yet the idea is too show how you would come up with the total amount of insurance and what kind of coverage you would place your majority of money in. Plus I would think it may be nice to have a fictitious family we all can refer too! Now I found this family by leading off with MP flyer that was specifically sent out to a neighborhood made up of families like this, people that are solid middle class in a neighborhood that seem to have a lot of young families residing and that seem to have people that lived in the homes for some years but not yet moved up to a bigger home, but may be contemplating on just that.
     
  2. flatfive
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    I'd cover the mortgage and give them Sti's phone number for the rest. :D
     
  3. STIBROKER
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    STIBROKER The Guy that GREENSKY can't not put on ignore. Moderator

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    HERE LET ME GET YOU MY #........
     
  4. James
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    I'm not sure if they can afford you?
     
  5. STIBROKER
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    STIBROKER The Guy that GREENSKY can't not put on ignore. Moderator

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    [​IMG]
     
  6. James
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  7. flatfive
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    flatfive Expert

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    Hey, I remember selling that guy! I was trying to set up my laptop on his breakfast bar and I said "I need a stool." I guess he misunderstood me.
     
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