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How Much Life Insurance Do I Need?

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By Byron Udell | November 9, 2018

You’ve probably known someone who passed away with no coverage or, perhaps, a policy that barely covered the cost of the funeral. Maybe $10,000 or $20,000. That’s okay, assuming that’s all she wanted to cover. But for most people, the loss of a loved one leaves behind financial obligations far beyond just funeral expenses.

No amount of money can replace a human life. But what life insurance CAN do is replace the economic value of that life.

The video below will help you figure out how much life insurance you should buy.

“How Can I Be Sure I Have Enough Life Insurance to Protect My Family?”

This is THE question when it comes to life insurance.

Of course, if policies were free, we’d all have millions of dollars of coverage, right?

By the way, after nearly 30 years in business, and having the opportunity to work with hundreds of thousands of clients, we have personally witnessed hundreds of real death claims.  So far, we haven’t heard any Widows complain about their husbands having too much life insurance…

Unfortunately, finding the right amount forces us to think about the costs as well.

Many financial experts recommend having coverage worth 5 to 10 times your annual salary, but we’ve never been fond of “rules of thumb.”  Why?  Because they don’t work very well.  And you can’t afford to make a mistake here.

Bottom line: how much money will your family need to replace the economic value of your life? Here are some things to think about:

  1. How much money will they need to meet immediate financial obligations? This includes all your final expenses and other lump-sum obligations. For example, uncovered medical costs, funeral expenses, estate-settlements costs, outstanding debts, mortgage payments and college tuition.
  2. How much income will they need to continue living a comfortable lifestyle? This category requires calculating your current day-to-day living expenses and future needs. For example, groceries, utility bills, childcare, etc.

In theory, if you can replace your income, your family will be okay financially, even though you’re gone.

Life Insurance Calculator

Our life insurance needs calculator below will help you estimate how much life insurance you need to make that happen.  It will ask you to answer a few quick questions about:

  • Your annual income before tax
  • What percentage of that income does your family need to live comfortably (this generally falls into the 70-80% range)
  • Your age
  • How long your family will need the income to last – 20 years? 50 years? Forever?
  • Annual estimated inflation rate (recent averages have been between 1 and 5%. Pick a number you’re comfortable with)
  • Annual estimated interest rate (this is the amount of interest your survivors will earn on the benefit each year. Current safe money rates are close to zero. Historically, passbook savings account and CD rates are in the low single digits)

Life Insurance Quote

Questions? Call 877-794-9817 to speak live with one of our experience life insurance professionals.

If you’d like to see how inexpensive it may be to get the coverage you need, click the Get Started button below to get your free quote.

Get started

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