Saturday, October 16, 2010

How Much Life Insurance Do I Need?

Bundesarchiv Bild 102-12915, England, Schönhei...Image via Wikipedia
It's a difficult to answer because it depends on so many different factors in you life. To decide, run down this list to see which apply to your situation. 
Do you even need life insurance? If you have saved all your life you may have already accumulated enough wealth for your family to go on in case of death. If you have no dependents, your single or your spouse can support themselves what's the need for life insurance. If all you need is enough money for burial maybe just savings can cover that. Insurance is only for people who would want to cover a financial need in case of death. 
If I do get life insurance, how long should I keep it? The term should be for as how long as the time necessary for dependents to become independent. In my situation I'll be contining life insurance for ten years after the basic needs are done. It's a comfort to my spouse and a sense of security. That's what I'm doing personally, but it's generally not the rule. 
Now the most important question is, how much to get? Ask yourself how much money per year is necessary to replace you. Remember your families expenses will be lower because your gone. The amount won't have to be your actually salary. Also how long will this supplemnent be necessary? Maybe it's just till the children are independent or the surviving spouse is able to self support. There is also funeral expenses, childrens college and any obligations that need to be continued after death. Consider the equity in your house as a source of money if sold after death. 
At the moment, I have ten times my income between the equity in my home and a term insurance policy. So I feel quite content my family will be ok after my death. When you buy life insurance, your still protecting your family after your gone, like you do when your here. 


  1. Hi, Good approach to one of the least favorite topics for most. We had a 15 year level term policy for the last 15 year. Beware of the premium on year 16! Time to find another policy!

  2. Once my kids get through college, I will probably drop my life insurance since we've been steady savers.


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