How to Determine the Amount of Life Insurance You Need
Purchasing life insurance can be one of the most important gifts you give to your family. Strike a balance between what you think your family will need and what you can afford to buy.
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Things You'll Need
- Term Life Insurance
- Whole Life Insurance
- Life Insurance
- Accounting Services
Instructions
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1
Calculate your after-tax income and then count the number of years of life expectancy remaining.
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Consult a reputable agent and use an insurance company's computer program to plug in numbers and generate a figure.
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3
Add outstanding debts, such as your mortgage, car loan and credit card debt.
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Remember to allow for any medical costs and funeral expenses.
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Remember that your family may also benefit from pension and Social Security benefits.
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Consider your spouse's ability or desire to earn income and consider extra child care costs.
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Remember the special needs of a disabled child or a parent whom you support.
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Tips & Warnings
No survivor ever complains about receiving too much in life insurance benefits, but strike a balance between what your family might need and what you can afford.
Remember that if your estate amounts to more than $650,000, your survivors will be obligated to pay federal estate taxes.
Determining the amount of coverage is your obligation. Don't be oversold.
