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Estimating
how much life
insurance coverage
you need can be
challenging. While looking for ways to lower
your life insurance costs,
you also want to make sure you have the right amount of life insurance
coverage. Some advisers have tossed around calculations based on your
salary times a certain number. Other insurance experts say
it’s
not that simple and you need to consider many factors including:
- how many dependents you have,
- what your family’s current monthly expenses
and debts are,
- what your family’s projected expenses are,
- other forms of benefits you have such as employer
life
insurance policies, credit card life insurance, association life
insurance, Social Security Survivor benefits and more.
One
way to estimate how much life insurance you need is to:
- Estimate what your family’s monthly
expenses would be.
- Add in your mortgage balance and other debts.
- Add in estimated future expenses such as funeral
expenses and college tuition.
- Subtract out Social Security benefits, other life
policies, your spouse’s income, and retirement plan benefits.
Your
coverage should be the difference.
When
you shop for a
life
insurance quote,
you’ll find that many life insurance companies have online
calculators to help you determine how much term life insurance or whole
life coverage you need.
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