How Much Life Insurance Do I Need?

Every day we hear on the news about someone dying and leaving family members behind. Some times, they have no surviving relatives while other times they leave behind a spouse and children. What happens to that persons’ debts, bills and funeral expenses? That’s where life insurance plays an important role.

There are differing viewpoints about how much life insurance one should purchase. One article may state a person should carry an amount that is twice their annual income, while others say three times or more. Other times, you'll see recommendations for what seems like an exorbitant amount.

Every situation is different. The best factor to determine how much life insurance is enough for you or your family is to evaluate your living expenses now. Many families today have a mortgage payment, car payment(s), credit card payments, health, auto and life insurance payments and the normal monthly utility bills. Many families today are two-income families with two spouses working fulltime. However, some families still manage to get by with only one person working and the other being a stay-at-home parent.

If you have mortgage insurance and insurance on your car loans and credit cards, they will be paid in the event of your death. This would certainly be a relief to your spouse. However, you will still need enough life insurance for your spouse and family to live comfortably for a few years, if not more. With you deceased, you may want your spouse to be able to stay at home with the children and take care of the home. With this in mind, you'll need a large enough amount of life insurance so it can be invested for the future of your family.

If you don't have mortgage and loan insurances, you'll want to have enough life insurance to pay off all the debts and still have enough for your spouse to live comfortably, by investing in college funds for the kids or to get by for a few years.

These are the factors you need to consider when determining how much life insurance you need. After paying off all debts, multiply the amount it would cost to live for one year by the number of years you'd like your spouse to be provided for financially. Now you're ready to contact an insurance agent.