How Much Life Insurance Coverage Should I Have?
The amount of life coverage you should have depends on what your family’s needs are. To make sure that you'll have enough coverage, evaluate your financial situation:
- What are your short term financial needs? Look at what your short term debts are like credit card or car loan debt. And think about what you might need for a medical emergency or for any home repairs.
- Any long term debts? How much more of your mortgage do you have to pay? Did you take out any student loans? What will the future tuition for your children be? Look at what you’ll need to pay these expenses.
- Look at your family’s current financial needs. What does your family need financially to keep their current standard of living? Figure out how much your family needs per year on necessities like:
- Household bills
- Transportation expenses
- Childcare
And see what you may spend on luxuries like vacations. Now, multiply your family’s total yearly expense by the number of years you think you’ll have to provide for them — before the kids are off on their own.
After you have figured out your financial situation, add up all of your liquid assets — like savings, stocks, bonds, mutual funds, Social Security benefits — and see what the dollar amount is.
Then subtract your assets' dollar amount from the expenses that you’ve figured that you will have. That will estimate what the minimum amount of insurance that you should have. And be sure to look at your financial situation yearly.
Make An Informed Decision
Don't worry too much about being exact on your numbers, because it's just a good estimate. The best way to make sure you get the right coverage is get advice from one of our professional agents.
When you request free quotes, you can get in contact with our licensed professionals and compare policies in just minutes — and make an informed decision.
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