How Much Term Life Insurance Does a Person Need?

Determining how much life insurance you need depends on a number of factors and the ideal amount of coverage will vary from person to person. Those buying insurance should determine what their personal and family needs are to determine the amount needed.

Children

Children are one of the primary factors that determine the amount of term life insurance needed. Parents may choose to buy enough insurance to provide for their children until they are on their own, which often includes college expenses.

Lost Income

Opinions vary regarding how much income a person needs to insure, but generally recommendations fall between five and 10 times the person's annual income. Remember too that parents who stay at home with the children also require insurance as day care and other child services are costly to replace.

Debt

Individuals with large amounts of debt may choose to purchase enough insurance to cover the amount of debt. A home mortgage is one debt that may be considered by those purchasing insurance.

Other Considerations

Many other factors may be included when determining the proper amount of term life insurance. Some of these include caring for elderly parents, caring for children with disabilities, medical costs, burial costs, and other expenses that will be charged to an estate.

References

• CNNMoney.com: How Much Coverage do You Need?
• Yahoo! Finance: What Kind and How Much? How Much Insurance Do I Need?