Protection Plan For Your Loved Ones!Your Protection Plan starts with identifying your responsibilities - family comes first! If you are married, your spouse is your first responsibility. Your kids are your second responsibility. If your parents have no resources of their own, you will want to plan for their needs as well. For each of these responsibilities, you need to estimate an annual income which will see them through life in your absence. Find out how much you will need for each of your responsibilities. Then, multiply the total amount needed by 25 to get the amount of insurance (protection) you need. This assumes that the insurance amount will be invested to earn a real return of 4% (actual return minus inflation = real return). If you want to play really safe, use a multiplier of 30 (real return of 3.33%) or 35 (real return of 2.86%), but then you will be paying more for the insurance. A really, really safe multiplier is 100 (real return of 1.00%) which, according to experts, is really sustainable over long periods of time. This is your fiscal protection number - FPN - the amount of money you need to ensure your loved ones will manage comfortably in your absence. If you have saved up something for any of these responsibilities, deduct that amount from the amount of insurance you need. This shortfall is what you need to insure yourself for.
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