Doing the Math: How Much Life Insurance?
Once you make the decision to purchase life insurance, you will have to endure the big question, "How much life insurance?" This can easily be determined if you do your math right. You must take into consideration all of your financial obligations and how much they all cost.
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If you have a car note, mortgage, school loans and other obligations to pay off, you will need to calculate them all and try to have enough coverage for the expenses that are most important. The amount of coverage you purchase should also be determined by the amount of dependents you have, as well as the expenses they would be left with after your death. In the end, your life insurance coverage should take care of expenses and have your family set up financially until they can become stable on their own. In the end: You basically want to replace your income stream should your family lose it.
What about "hidden income" when you're purchasing life insurance?
Some individuals have a hidden income; this is money that is received by an employer that doesn't show up on your gross wages. So if you have hidden incomes, then you should plan to replace that as well. This money could be coming from employer subsidies, perks and other types of bonuses. What you're contributing to your 401k plan and health insurance should also go into consideration. Perhaps the most commonly mentioned expense includes funeral and burial expenses. These expenses could be significant, and should also be included in your calculations.
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The numbers game: How much life insurance is standard?
After all is said and done, you'll want to plan to purchase insurance that covers 5 to 20 times your annual income, depending on your family's lifestyle and needs. If you choose to purchase 20 times your salary, you can take comfort in knowing that your family can earn a steady stream of income equivalent to your salary in the interest earnings of the benefit. This way, the actual benefit is never depleted and your family can depend on this income for life.
If you have multiple children who will be going away to college, then it is a good idea to calculate how much their education costs will be. If your spouse has no means for retirement, then you may want to add some extra in there for him or her to be able to survive during those non-working years when you're gone.
If you're ready to purchase life insurance, you can request a fast quote through How-Much-Life-Insurance.com. Our representatives can get in contact with you within 48 hours and you'll be well on your way to that perfect life insurance plan!