Life Insurance coverage is an important part of everyone’s financial plan – but not everyone needs the same life insurance coverage. Your situation, obligations, and priorities are unique to you, and the amount of life insurance you need reflects that. But if you purchased life insurance years ago,  perhaps before you had a house and children, you may need to bump up your coverage. Your employer may offer a plan, but it may not be enough to cover all your needs.

How much Life Insurance do you need?

There is no simple formula that can answer that question. Many people, buying a life insurance policy is a smart move that will ensure financial coverage for family and loved ones. How much life insurance you need will vary based on personal and financial circumstances, but essentially you need enough to replace your income and cover your dependents' expenses, including future ones. 

However, simply multiplying your income by a certain number doesn't provide a complete estimate for how much your family will need. And if you're a parent, you likely need life insurance even if you don't work outside the home and earn an income. You should have enough coverage in that case to cover the cost of services you provide the family for free, such as child care.

5 Question to Consider Before Deciding How Much Coverage You Need

  1. How much money would your family need today to live on if you didn't make it home from work?

  2. What assets do you have now?

  3. How much debt are you carrying?

  4. Do you have a stay-at-home spouse

  5. Have you factored in additional expenses unique to your situation?

These are just some of the questions to consider when estimating how much life insurance to buy. By doing a bit of homework and with a solid set of numbers in hand, Financial 411 can help you determine the best policy type for your family.