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Volagent, thanks for elaborating on the income need. How do life insurance agents determine the amount of insurance someone like me needs?
I'm still confused about the front loaded stuff. How can the cash not be there to begin with and then suddenly appear later?
Several ways really, which ever way fits the agent's style or objectives.
Mine is to add up all your "liabilities" and then see how much was needed immediately in capital and then how much was needed to produce an ongoing income stream. Typically you use conservative numbers as the courts frown upon putting widows in aggressive investments.
So you would pay off all debt, set aside money for college for the kids, and then see how much income you wanted for the wife and for how long. From that it was pretty easy to see how much life insurance was needed. Also, you may or may not want to account for inflation.
The number is almost always way more than the person thought going in. They might think 250,000 is more than enough, turns out they needed 2 million. Obviously each case is different, but I really can't remember anyone who would sit down that didn't need more insurance.