What to Look for in a Life Insurance Policy
Explore the various life insurance options, including those offered by VGLI. By checking
each, you will be able to pick what is best for you. When shopping for life insurance, the
program you choose should pay:
- Funeral expenses and related bills
- Debts or loans owed by the insured person at the time of death
- Lost earnings
Lost earnings are what the person would have made over the rest of his or her working life had
he or she not died. There are a variety of ways to calculate lost earnings. For
example: The sole wage earner for a family of four dies at age 45. He made $30,000 a year
at the time of his death. Because the household has been reduced from four to three,
three-fourths (75 percent) of his income needs to be replaced for 20 years (when he would have
turned age 65). This method shows lost earnings which need to be recovered through insurance
as $450,000: 75% x ($30,000 x 20 years) = $450,000.
Date Last Reviewed: July 2, 2009
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