You’ve decided it’s time to purchase a life insurance policy. So, now the question is, how much life insurance do you need?
First let’s look at why you want life insurance.
What Life Insurance Can Do
In the past, you may have thought you didn’t need life insurance. But circumstances—and minds—change. There are plenty of reasons life insurance protection is a good idea.
Perhaps you want a life insurance policy to:
- Pay off your mortgage so your family can stay in your home
- Fund your death expenses
- Replace your income when you’re no longer able to be there for your family
- Be sure your kids are taken care of financially until they can establish their own financial stability as adults
- Cover your children’s college educations
How to Figure Out the Right Amount of Coverage
Here’s a simple approach to figuring how much life insurance coverage to buy.
- Figure out your income replacement needs.
Multiply your current annual salary by however many years you want to figure in.
- Add the costs of your debts.
How much would your family need to pay off your mortgage balance? What other kind of debt might need to be covered, such as loans, credit cards and so forth.
- Add future needs.
Figure in estimated future costs for things like your kids’ college educations and your funeral expenses.
- Subtract liquid assets.
Subtract from the total any liquid assets you have including what you have in savings, current life insurance you get through work and payouts from other coverage you already have.
- Now add a little more protection than you think you need.
Keep in mind that over the coming years, your income and expenses will probably grow.
Ready to talk to someone about the life insurance coverage that’s right for you? Get started by getting information specific to your needs to receive quotes. To speak with someone about planning, call (844) 524-6503.