How much life insurance do I need?

by Jeff Rose on July 9, 2013

Death is not a pleasant topic, especially when it is your own, but it is important to prepare in case the unexpected should occur.

Life insurance is essential in order to protect the ones we love from financial hardship; however, it is hard to know how much coverage is enough.

How Much is Enough?

The amount of life insurance that you need will depend on your circumstances. The main factor that you need to consider is if you have dependents that will need financial support after you leave this life. You will need additional coverage if you are supporting a wife and children.

Financial Obligations

Regardless of your circumstances, you want to make sure you have enough insurance to cover the funeral and burial expenses. Funerals can cost a significant amount of money, so you want to make sure your beneficiaries do not get stuck with the bills. In addition, your insurance should provide enough money to pay your remaining mortgage, estate taxes, medical bills and any other debts that you might have. Your house payment is probably your largest expense, so you want to make sure your insurance policy pays off your mortgage.

If you have a family that you are supporting, you need to have enough coverage that allows them to maintain their lifestyle if you pass away. You need to consider college tuition, child care expenses, food and clothing. You also need to think about utility expenses and entertainment.

Life insurance can also be used as a savings or investment account. You can save money for retirement, college tuition or to meet any other financial goals. In most cases, you can adjust your insurance amount according to your financial needs.

Thinking Forward

When choosing a life insurance policy, it is important to think about inflation. Prices keep rising, so you need to consider the cost of living. You need to make sure your family has an adequate amount of money to keep up with their standard of living.

Life insurance is very affordable, so research your options to find the best policy for your needs. A few dollars a month can help protect your family from financial disaster should something happen to you. Do not assume that you are young and do not need life insurance. Unfortunately, disaster could happen when we least expect it, so you are never too young to purchase life insurance. The future of the ones you love could depend on it.

Before you purchase life insurance, decide how much life insurance coverage you need, so you will not be required to pay high premiums. Go online and enter the criteria needed to get an estimate from an insurance calculator. Hopefully, you will live for a long time, but you want to be prepared in case tragedy should strike.

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