How Much Life Insurance Is Right For Me?

What's the hardest part of buying life insurance? For most people, it's trying to figure out exactly how much you should have. It doesnýt make financial sense to spend money on protection you donýt need. But you still have to make sure your family will always be comfortable even if the worst happens.

Some financial advisors recommend multiplying your yearly income by 7. Others recommend purchasing just enough coverage to protect your income during your working years, and put the savings into retirement investments.

So whatýs right for you?

Before you decide to buy a policy, ask yourself these questions about your current and future financial needs.

4 Questions To Ask Before You Buy Life Insurance

The answers to these 4 questions will help you determine what amount of life insurance is right for you.

1. Do you have any short-term financial needs? 

You can get this figure by first adding up your short-term debts, like credit cards and car loans. Next, add in the amount you would need to cover emergency expenses like unexpected hospital visits or home repairs.

2. Do you have any long-term debts?

Long-term debts include your mortgage, any student loans, or your childrenýs expected tuition costs. You can use todayýs college prices to give you an idea of how much your children will need in a few years.

3. How much would it cost to maintain your familyýs current lifestyle?

Add up how much it costs to run your household and care for your family for one year. That includes your household and food bills, transportation costs, and childcare. Donýt forget to add in standard of living expenses like clothing and travel expenses. Once youýve added up one year of costs, multiply that by the total years you expect to be your familyýs financial provider.

4. What is your familyýs total number of assets?

Add up your familyýs resources. Your resources include all your savings, investments, home equity and Social Security benefits. Only add up your liquid assets those resources that your family can easily turn into cash.
  

Next, all you have to do is subtract your total resources (#4) from your total expenses (#1,2,3). This number is the minimum life insurance protection you should consider buying. You should ask yourself these questions once a year so you can make sure your life coverage matches your current financial situation.

We can also help you figure out your life insurance needs and answer any questions that you have. Click here to Contact us or call us today at 866-577-3619 for a free consultation about your options.

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