Life insurance is a vital safety net to have for the Family. Because one never knows what will happen, having a good life insurance policy in force is a great way to ensure your family will be provided for should something unforeseen occur.
You may ask, “How much life insurance do I need?” There are several calculators online to assist you in determining this information. Look at some websites, Smart Money, Yahoo Finance, and Cash Money Life, to explore various methods to calculate your life insurance needs.
Here’s one simplified method that provides a conservative estimate of the life insurance you need.
Calculate Your Family’s Living Expenses Needed in the Event of Your Death
Funds Required by Your Family Should You Die
Balance Needed for Life Insurance
Your Income
$
Your Family’s needs for the next ___years
__ years x $ = $
$
College for __ child(ren)
$
+
Mortgage Balance
$
+
Your Funeral Costs
$
+
Total Overall Costs
$
Example:
Funds Required by Your Family Should You Die
Your Income
50,000
Your Family’s needs for the next ___years
3 years x $50,000 = $150,000
150,000
College for _2_ child(ren)
65,000
+ $65,000
Mortgage Balance
170,000
+ $170,000
Funeral Costs
8,000
+ $8,000
Total Overall Costs
393,000
In the event of your untimely death, don’t forget your spouse will also have some assets.
From your balance on the above worksheet, subtract any savings accumulated. The final balance will indicate how much life insurance you’ll need to protect your Family should you die.
Determining the amount of life insurance you need is a very worthwhile exercise. Use this worksheet and other life insurance calculators to determine how much money you need to protect your Family.
Upon completing this exercise, you’ll be better educated about the amount of life insurance coverage to obtain.