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Deciding How Much Life Insurance You Need
Author David Schneider | Aug 10,2007
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You have some assets and/or a family to protect and you're ready to invest in life insurance. Or perhaps you already have some life insurance and have questions about whether you have the right kind, whether you have enough, or even whether you have too much life insurance. If you're trying to come up with a number that fits into your budget, but provides the financial security you need for yourself and your family, here are a few tips.
1. Write Everything Down
Trying to decide how much life insurance you need off the top of your head won't get you far. How much life insurance to have is an important decision and you want to treat it with the utmost care. To do this, you'll want to sit down with your spouse and possibly other adult loved ones and map out your needs and concerns.
2. Know What You Have (Including Your Current Life Insurance)
The first thing you'll want to do is figure out what your family's assets will be if something should happen to you tomorrow. You'll want to know what your spouse or other adult household member's annual income will be. Make sure to factor into the equation that if your spouse is able bodied, but not the primary breadwinner at this time, they may take on a full time job should something happen to you. You'll also want to figure in any other financial assets your family might hold such as Social Security benefits, property, savings accounts and other investments.
3. Know What You Need
Calculate your family's annual living expenses. Be realistic. Consider you will probably want your family to enjoy the same standard of living they did when you were alive. Also consider that at some point dependent children will come of working age and hopefully be able to support themselves or even help out the family. If you have young children, you'll want to factor in their education and health needs. There is also the matter of funeral and estate expenses should you become deceased, debts and contingency and retirement funds.
4. Add It All Up
Subtract what you have from what you will need, and you'll know how much additional life insurance you need, if any. You may discover you have too much life insurance, in which case you may want to invest some of that premium money in other areas. If you determine you don't have quite enough life insurance and need more, a good way to find it is through our online search form. It's easy to fill out, and can quickly provide you with up to four life insurance companies to choose from. Find the one you like and get that extra life insurance you need to fill the gap A.S.A.P. |
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