Many factors go into determining how much life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition you might need. These include:
- the amount of your debts,
- any final expenses and estateEstate The total sum of money and property you leave behind when you die.+ read full definition taxes that will be owing on your death,
- the current and future care and education costs for your children, and
- the income your family relies on to maintain its lifestyle.
An insurance agentInsurance agent A person who is trained and licensed to give expert advice and sell insurance. Some get extra training so that they can also sell investments. They get paid by the companies whose products they sell.+ read full definition can take you through a detailed analysis of how much insurance (and what types) you may need.
4 questions to ask yourself
The amount of life insurance you get will depend on your answers to these 4 questions:
- Do you want the insurance to replace all or just some of your lost income?
- Do you want your family to live debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set date.+ read full definition free or just continue paying down debt?
- Will you spend the capital from the insurance payment or just the investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition earningsEarnings For companies, it’s the money they make and share with their shareholders. For investors, it’s the money they make from their investments.+ read full definition?
- How much can you afford to pay for insurance?
Calculate your life insurance needs
Most insurance companies have calculators on their websites.
Get the advice of an insurance agent. They’ll take you through a detailed analysis of your insurance needs.