It might seem tricky to figure out your individual needs for Life Insurance. There are a few steps you can take to calculate how much coverage you need. Ask yourself the following questions:
- Besides your mortgage payments, how much debt do you carry?
Does your debt increase each month or are you able to partially cover it by spending less than you earn? If you have existing debt, your needs for Life Insurance coverage will be higher so that your family can pay it off.
- How much money do you spend every month?
Calculate the amount on which your family depends every year, and this will give you an additional idea about the amount of needed coverage.
- How much money do you save every month?
Being able to save some money every month reduces your need for higher coverage.
- What are your savings goals for long-term?
Do you know how much money you need to pay for your immediate future after retirement? Do you manage to save enough money to cover your retirement, kids’ education, or/and a large purchase?
- In the event of your passing, how much income will your survivors need?
This question is the most important in determining how much Life Insurance you need. However, in order to give the correct answer to this question, you should consider the questions above first.
These questions are the brief guide to help you calculate the amount of Life Insurance coverage you need. Individual needs differ, and to make sure you do the calculations right, consult with a licensed independent agent who can give you additional information and help you estimate the amount of Life Insurance coverage you need to protect your family and assets.