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Additional Details
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schild02 | How do I figure how much life insurance I will need? |
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Doing the Right Thing
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Financial experts say you need ten times of your annual gross income. So if your gross income is $40k/year, you need $400,000 of coverage. "The idea of life insurance is to not change your family lifestyle, but to serve as income replacement upon your death." |
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MostChoice.com
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Hadley, one of the answerers above, has explained it quite well. I’ve linked to two articles describing how you calculate how much life insurance you need and two links to online calculators to help you figure it out. The first article includes some online calculators and tables as well. Deciding how much life insurance is enough is a very personal decision – what’s right for you might not be right for someone else.
Once you’ve figured out how much life insurance you would like to purchase, try shopping around for the perfect policy at MostChoice.com. Like a lot of sites, you can find free online quotes and policy information, but you can also get in touch with locally licensed life insurance agents. Talking with more than one agent will help you better understand what’s available near you and putting more than one agent to work for you will increase the chance that you will quickly find the right coverage at the right price.
You can find MostChoice here:
http://www.mostchoice.com/life-insurance.cfm
Good luck!
Barnes@MostChoice |
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'Tater
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There are a million different ways to calculate this - and no right answer. I'm a Life Insurance Agent, and I tell my clients that once we've done all the math to figure out what my yellow pad or my computer program say they need, the correct amount is the answer to the following question:
"If you're riding in a plane and you hit bad turbulence, at what amount of coverage will you not have that momentary panic about how your family will get by financially?" - That's the right answer for you.
A good insurance agent (CLU, ChFC, or CFP) will have the ability to talk you through this and work out the arithmetic for your particular situation. Make sure you get enough so you don't have to have this conversation every year. |
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Ron@InsureMe
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No formula to determine how much life insurance coverage one needs is right for everyone. A quick and basic way to figure out how much you would need is to take your annual income and multiply it by 7. For example, a family with an income of $60,000 might need at least $420,000 worth of life insurance protection. But some insurance experts feel one may need as much as 10 times their annual salary.
A more complicated option is: Determining Expenses (-) Assets: Figure a rough estimate of your annual family budget. This would include your mortgage, child care, insurance, and basic living expenses. Don't forget to include expenses such as vacations, and future education plans such as private school and college. Next, estimate a figure for your assets such as savings, social security benefits, or any other income that will be there such as the income of a surviving spouse.
Life insurance is best found by investing time, educating yourself and comparison shopping. InsureMe, http://www.insureme.com/landing.aspx?Refby=614505&Type=life is designed to be an invaluable resource for insurance shoppers like you in this process. Fill out our easy form, and you can get up to five insurance quotes from insurance agents who can help you make the best decision regarding your insurance. Once again, shop around, get multiple quotes, and learn all you can about a policy before you buy life insurance.
I hope that helps!
Ron @ InsureMe |
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brngn_sxy_bck
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Here are the most important things to consider when figuring out how much life insurance you need:
Loans, Mortgages and any other debts
(Who would pay your debts?)
Income replacement
(How much of your net income would your family need (after your death) on an annual basis?)
Final Expenses
(Who would pay for your funeral costs and uncovered medical bills?)
Education
(How would your children afford a college education?)
If you notice, the above most important things spell out L.I.F.E.. |
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Hadley
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The amount of term life insurance a person needs will depend on their specific situation and the reasons for buying the life insurance policy.
One way to decide how much term life insurance you should buy is to consider the needs of your family if you were to pass away prematurely.
Term Life insurance may provide financial security to meet many of your family’s needs by providing a fund they can use to:
Pay off an individual’s debts, such as medical bills, funeral expenses and health care costs
Pay for estate taxes and other expenses related to settling their estate
Provide a lifetime income for your spouse
Pay off an existing mortgage on your home
Pay for your children’s college education
Provide retirement funds for your spouse
Provide an adequate income for your spouse to give your family time to adjust to a new standard of living without you or your income
Receive interest to provide money for some special need – such as travel, education or health care costs.
Provide a monthly income until your children are grown up and living on their own.
The future financial needs of your family should be a major consideration in deciding the right amount of term life insurance to provide the financial security they deserve.
Another contributing factor is the amount of your annual salary. In addition, your family’s style of living they are accustomed to, your monthly expenses and future financial goals, such as, college tuition, retirement funding, vacations and living expenses.
You can use the life insurance needs calculator at http://www.term-life-online.com/term-life-insurance-calculator.html to quickly determine how much life insurance you need.
I hope that helps. Good luck! |
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MoniqueLise
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This is a tough question to answer because some folks will advise you in such a way that you are paying for a lot of insurance that you don't need. At the same time, you want to have enough to ensure that your family can continue on. While I agree with some of the points of the other people who have answered the question, I have my own ideas on what is "enough" insurance.
In general, rinancial planners say that you should have insurance equal to about 5 timces your annual salary. However, this number isn't necessarily the right amount in your specific situation. Here's a way to calculate a number:
1. Enough to pay off your existing debt. In most cases, the most important amount is enough to pay off your mortgage.
2. Enough to provide for child care for any children. This amount will vary -- I would never recommend that it should pay for childcare until the child is 16, and I also wouldn't say that you should have enough for only a year. I suspect that enough for 2 years is right; this allows your family time to grieve and time for the situation to settle, but also acknowledges that things can change.
3. Enough to replace at least 60 % of your salary for 2 years. My reasoning is the same as above; you want your family to be able to grieve and have the situation settle, but the intention isn't to leave them rich. At some point, they will be picking up and going on -- and if all the debts of the family have been paid, they will have lots of money to handle other additional expenses.
4. Enough for your burial. This point is self-explanatory. Funeral and burial expenses are not cheap.
5. Enough for a college fund for children. You aren't trying to pay for their entire college -- but should provide enough of a nest egg so that (given any time that will pass before they go to college) there will be enough there for at least tuition.
The trick with this formula is that the numbers will change regularly. So you should be reviewing your insurance every year or so, and changing (either increasing or reducing) coverage regularly. Assuming that you are getting older, your debt is reducing and your children are getting closer to college age, your total amount of life insurance should be getting smaller. |
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Amberlyn4
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figure out how much it will cost per year to raise each of your children to adulthood, add the amount your spouse will need for retirement and that should tell you how much you need.If you have no spouse or children you need enough to pay off all your bills and bury yourself. |
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LifesAMystery
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By looking at what it would take to cover your outstanding debt, any hospital debt (if any), and burial. Then maybe up that a little to be on the safe side. |
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