How do I determine what is the right amount of life insurance to buy for me?
Answers | 7
The most important is what you can afford. Life insurance is a long term investment so be sure that you are able to set aside the required premium for the foreseeable future. Making that determination first will lead you more easily to the right decision of the type and amount of insurance needed.
Then determine what need you want life insurance to solve?
• Pay off home
• Provide funeral expenses
• Replace your income
• Debt payoff
• Ensure college funds for your children
This may lead to an amount of life insurance to cover your specific needs.
There are many life insurance calculators available and most agents can assist you with very specific refinements for your needs. However, you will need to be prepared to determine your assets, your short and long term expenses, and your income.
I: Income x 10 or 20
E: Education or other expenses
1. Human capital = Annual income x number of years going to work.
2. Total debt + legacy amount for family and how many years.