How Much Life Insurance Do I Need?
How much life insurance you need depends entirely on your specific situation. There is no one-size-fits-all solution when it comes to life insurance. Simply searching “how much life insurance should I have” will not get you all the answers you need, but it can get you point in the right direction. In this article we’ll try to break down how much life insurance you need and give you some calculations to determine how much life insurance you need.
Once you have a good idea, it is wise to discuss your options with an experienced life insurance agent. You can click here to get in contact with one.
What Type Of Life Insurance Should I Buy?
There is a need for each type of life insurance policy. Whether one is better than the other depends on whether or not you have the right type that will satisfy your needs and solve your problems. There is no one-size-fits-all solution when it comes to life insurance. You should consider your own circumstance and gather all the information you can before you decide how much life insurance to buy and on a type of insurance for you.
The right life insurance program will:
- Be in force when it’s needed
- Fit into your budget
- Be the Foundation of your financial plan
How Much Term Life Insurance Do I Need?
How much term life insurance you need depends on many factors. You first need to figure out if term life insurance is even the correct life insurance policy for you. Consider the following questions:
- Do you only need protection temporarily?
- Are you looking for the most simple plan?
- Are you looking for coverage specific to paying off your mortgage?
If you answered yes to these questions then term life insurance may be for you. As to how much term life insurance you should buy, you’ll want to read down below to calculate your life insurance needs. It’s also a good idea to consult with a life insurance expert. They will look at your needs and wants in more detail and be able to craft a policy specific to you.
How Much Whole Life Insurance Do I Need?
- Do you want protection for all your life?
- Do you want your plan to continue if you are unable to pay premiums?
- Do you want life insurance for “when” you die not for “if” you die?
- Are your needs, wants & problems permanent rather than temporary?
If you answered yes to these questions, then you will want to consider purchasing whole life insurance. Whole life insurance, simply put, is just like it sounds- it’s going to last you your whole life. This is a policy that is going to pay out eventually. It’s not a question of if, but when. Whole life insurance can have many different moving parts, so it’s very important to consult with an experienced life insurance planner when trying to decide how much life insurance to buy.
If you’d like someone to take a look at your needs and come up with a plan for you, click here. We’ll be happy to help.
How To Calculate Life Insurance
When figuring out how to determine how much life insurance you need, you can use a simple formula. There are many “how much life insurance do I need calculators” but in essence, they are all the same and take into consideration the same number.
Let’s take a look at the life insurance calculator:
Annual Income Replacement (The amount of annual income your family would need upon your death.)
Years Income is Needed (The number of years your family would need an annual income stream upon your death)
Cash For Immediate Needs (final expenses such as funeral costs, medical expenses, etc.)
Debts & Obligations (Estimate the amount needed to pay off your debts and other obligations. Include credit card balances, car loans, educational loans, mortgage loan, and others.)
Total Funds Available (The total sum of your current savings, investments, current Life Insurance, and other assets that may provide cash or income to your family.)
Total Estimation of Life Insurance Needed
As always, when wondering how to calculate how much life insurance you need, it’s important to consult with an experienced life insurance agent. No one person is the same. The life insurance calculator can get you pointed in the right direction, but a life insurance agent can help you finish the process and find the right life insurance policy for you.
How Much Life Insurance Can I Get?
Now that we’ve discussed how much life insurance to get, lets talk about how much insurance you can get or how much life insurance do I really need. Some people aren’t content with getting just enough life insurance to cover their needs, they want to purchase even more.
The amount of life insurance you can get will depend on each life insurance companies underwriting guidelines. There is no limit to the amount of life insurance policies you can purchase. For instance, you can go to one company and buy a million dollar policy and then go down the road to the next company and do the same thing.
However, there may be some companies that will limit the dollar amount you can purchase, if you can’t justify a need for that much. For instance, you make $60,000 a year, have $30,000 in debt and no dependents. You’d be completely justified in purchasing a million dollar policy; but if you were to try to purchase a $5o million policy, the insurance companies underwriting department may question your motives.
The real answer to how much life insurance to get is to get enough to cover your needs and solve your problems and that falls into your budget.
For help with your insurance needs, contact us here. An experienced life insurance agent will be in touch with you.