How much do I need?
How much Life Insurance do I need?
Answer:
Like auto insurance coverage, it is sometimes difficult to see the true value of life insurance coverage until you actually need it. In the meantime, the only way you will feel comfortable with your life insurance policy is if you understand, and agree with, the reasons you bought it in the first place. After you understand the responsibility and why you should have life insurance coverage, determining how much life insurance you need is relatively simple: just calculate your short term and long term needs
1. SHORT TERM:
Determine total short term needs in the event of your untimely death
- Outstanding loan balances (auto loans, etc)
- Outstanding credit balances (credit cards, other lines of credit)
- Mortgages (first mortgage, second, equity loans, etc)
- Estate settlement costs, final medical costs, funeral expenses, estate taxes
2. LONG TERM:
Determine total long term needs in the event of your untimely death
- An income replacement stream
- College expenses that you would like to cover for your children
- Child care costs if your spouse will work after your death