Oct 23

To find out how much you need to invest in order generate
$1,500 a month before taxes, multiply $1,500 by 12 to find out how much you need a year—$18,000. Let’s assume that the going interest rate is 6 percent (a conservative figure, but we are trying to make you safe, and to be safe, it’s always essential to think conservatively). So we need to figure Out how much you need to invest at 6 percent to generate $18,000 a year. We divide 100 (percent of any whole) by 6 (the interest rate we’re after), which gives us almost exactly 17. Now we multiply $18,000 by 17 to see how much needs to be invested at 6 percent to generate $18,000 a year: $306,000 ($306,000 x 6% $18,360). You received a total of $600,000 in insurance proceeds, and now you know that you have to invest $306,000 for income generation for as long as you continue to bring home the $1,500 paycheck. The remaining $294,000 is what you can invest for growth—and also serves as backup if something happens to you. You have covered all your bases.
If you had decided simply to purchase the minimum amount of insurance needed in this situation, which was $300,000, you would invest all of that to generate the $1,500 a month income you need and hope you are able to keep on working while you build up more of a nest egg.
When money is an issue, though, as it is for most of us, we don’t always have the luxury of buying enough life insurance to assume the worst. With my clients there’s almost always a discrepancy between the maximum of insurance wanted and the minimum of insurance needed. Your needs, comfort level, and what you can afford all have to be taken into account. If you’re using a professional to help you figure this out, make sure he or she has your needs and pocketbook in mind and isn’t just thinking of all that the commissions will buy. I would suggest that you’re better off trying to figure out how much insurance you really need and can afford, then calling the following numbers to get quotes to compare the best-priced policies. Here are the numbers and Internet addresses of the insurance quoting services (make sure that you check with at least three of the following services; you would be surprised how much they can differ):