How Much Life Insurance for a Blue Collar Worker?

One of the most difficult decisions for blue collar laborers to make is how much life insurance to obtain to help their families and beneficiaries. How much is too much? How much is too little? The exact amount needed can vary from person to person. However, there are several things that a blue collar work can take into consideration that will help make the right decision in regards to life insurance.

One of the first things to consider is current income and lifestyle. Generally, life insurance coverage should equal 5-10 times the worker’s current income. So if a construction worker’s annual income is $55,000, then he or she should consider life insurance coverage from $275,000 to $550,000. Or if a janitor’s annual income is $32,000, then he or she should consider $160,000 to $320,000 worth of life insurance coverage.

Another thing to consider is marital status, whether current or future. If the worker is currently married then the spouse’s well-being and lifestyle should be considered. There should be planning for unexpected situations such as medical needs and maintenance/household needs in the event of the worker’s demise. Life insurance benefits can help pay for medical expenses, funeral costs, and other unexpected expenses.  This type of financial help is especially comforting to a grieving spouse.

Furthermore, if there are or will be dependents then they have to be considered as well. Most people that are insured list their dependents as their beneficiaries. This ensures that their kids are financially comfortable in the event of their death. The short-term and long-term needs of the children should be considered.

Moreover, current assets and investments should be considered. If there are significant assets and investments then much life insurance may not be needed. However, if there are little to no assets or investments then life insurance will be essential. Most blue collar workers do not have major assets. Many, however, have investments in the companies that employ them. These investments may or may not be sufficient to maintain a lifestyle for the remaining family after his or her death. A basic way to factor in assets and investments to determine the amount of life insurance needed is to subtract the current assets/investments/savings from current obligations/debts. This should give you a minimum amount of life insurance needed.

Finally, a blue collar worker should consider his or her financial situation or debts when determining how much life insurance is needed. The last thing someone wants is for the surviving family to bear the responsibility of paying his or her debts. While knowing how much debt one may have at his or her time of death is almost impossible having enough financial “cushion” in life insurance coverage can ensure the debts will be taken care of without much, if any, strain on the surviving family.

At a minimum, if a blue collar worker answers the questions "how much will my family need for immediate expenses after my death" and "how much will my family need long-term" then the amount of life insurance can easily be determined. Answering these important questions whether through a predefined calculation process or with the help of a life insurance agent can help any worker make the right decision for the family.

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