How Much Life Insurance Do You Need?

It’s too morbid to talk about life insurance. It’s never pleasant thinking about how life would be for you if you lost a loved one, however, things do happen every day and the statistics don’t lie. You have to accept that it’s simply a fact of life. At some point in our lives this is something that many of us will have to go through and overcome it. Doesn’t it make sense to be ready and well-prepared for it rather than be a sitting duck when an overwhelming situation happens?

 

Before buying life insurance from any insurer, you should ask yourself, “how much do I need?” If you could answer this question, life insurance shouldn’t be that complicated and you should be able to choose your ideal policy easily. It’s never a bad thing to buy too much but don’t be surprised if unexpected expenses stacks up. The amount that you’ll need to purchase is going to depend on several critical factors such as whether the person being insured has a family or not. Let’s take a look at a few things to consider how much life insurance you need.

 

You should look at your current and future needs. If you have a young family or a spouse that is dependent on your income to live, it’s a better choice to buy a life insurance that could cover your small family and spouse for at least 20 years or more. Some people would tell you that it’s better off over insured, then not having enough insurance. Many experienced insurance professionals state that you should have at least a life insurance policy of 14K to cover the final expenses. You should also purchase life insurance by multiplying your salary. For example if you earn 5K per month, you should buy an insurance policy of at least 25K.

 

Other insurance professionals also suggested that you should look at your family average expenses for the amount of years that you want to get them covered and figure out how much money they need to continue living comfortably. There is a formula used by life insurance professionals to figure out how much insurance you need for your age and level of converge for your family. In the event of death, this can be a huge burden for your family members. They not only have to go through the grief of a lost precious one, but also the added financial burden that was placed on them suddenly. I’m sure many people want to make sure their family could continue and maintain their living standards in the event of death. Things to consider are the cost of your current home, car loans, and maintenance of assets, education costs for children and basic utility costs. Usually the more they depends on you, the more insurance is necessary.

 

It’s important to have enough coverage in order to repay any outstanding debt that you may have, especially if you’ve had someone co-sign on a loan for you as they would be fully responsible for repayment in the event of your death. If you are single, do not have any dependents and have a sufficient amount of savings to take care of your final expenses, then you might want to consider whether you want to buy life insurance in the first place.

 

One thing is for certain, make sure you put lots of thought into the amount of life insurance you do purchase and talk to a financial planner, accountant or insurance agent to learn more about how much life insurance, you personally should purchase.

 

There are many more questions you would need to ask yourself here, but let’s just assume that you are the sole breadwinner and your wife works part time as she is a housewife for the rest of the time. Let’s also assume that you have three children. You have a mortgage, auto payment, some credit card debt and have financed some renovations.

 

Let us keep this as simple as possible because each person’s situation is going to be different, but in this case, you would need enough coverage to support your wife and children at least until the kids turn twenty. You’ll also need slightly more than enough to repay any personal debt that you currently have. You could purchase a separate decreasing Term Life policy to pay off any outstanding debt that you may have.

 

You have read this far and if you don’t have any insurance now, you may have just received a slap back into reality. It takes a lot of hard earned money to pay for our most basic daily, weekly and monthly expenses. However, do you have the coverage that you would need to have in the event of an unexpected disastrous event? Here is something for you to think about.