One of the most important steps when shopping for life insurance is to find out how much you really need. A lot of people will come up with an arbitrary number and when I ask them how they came up with that amount, their response is usually “I don’t know.”
In order to determine how much life insurance coverage you should have, you need to consider a couplHow e things. First is your dependents, which can include children, a spouse, parents, or anyone else who depends on you for financial support and assistance. Secondly, you need to evaluate your assets and liabilities.
Many agents will recommend having 5 to 10 times your annual income, but your financial situation may require more or less than that amount. Here are some questions to ask to determine how much life insurance is enough for you.
If you are married:
- How much income would need to be replaced for your spouse to be able to continue financially?
- What kind of lifestyle do you want your family to have if something happens to you?
- How much money will your spouse need to pay for your children’s education expenses?
- How much money will your spouse need to take care of final expenses such as funeral costs, estate taxes, probate fees, etc.?
If you are divorced:
- Does your divorce agreement require you to have life insurance for your ex-spouse?
- How much financial responsibility do you have for your children’s education costs?
- Are you financially responsible for the home?
If you are single:
- Do you have any outstanding loans or debts that would affect your remaining family members?
- Do you have family, friends, or a charity who you would like to leave money to
An experienced agent will go over all of these things with you to determine your family’s obligations and financial goals. I always say that it’s better to have some life insurance than to not have any, but it’s best to have a sufficient amount to make sure your family will be taken care of. Get a free quote for life insurance today to compare rates from the nation’s top carriers.
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