How To Calculate Your Life Insurance Needs
Unsure how much life insurance you need? Let’s calculate life insurance needs in a few simple steps!
Many people ask themselves how much life insurance they need. Generally there is no one-size-fits-all answer to this question. However, there are some guidelines that can help you determine the right amount of coverage for your situation.
One common rule of thumb is to purchase a policy that is worth 10 times your annual income. So, if you earn $50,000 per year, you would need a policy with a death benefit of $500,000.
Another factor to consider is the amount of debt you have. Consider if you have a mortgage or any loans that need to be paid off. You’ll want to make sure your policy is large enough to cover that debt.
Ultimately, the best way to determine how much life insurance you need is to calculate what problems the death benefits will solve based on your financial situation- Loans, debt, mortgage, bills and living expenses.
Once you’ve got that covered you want to leave some extra money behind. This way your family can get through the next 5-10 years without any financial struggles.
The size of your life insurance policy coverage should include covering the cost of your current financial responsibility. Next, adding about 7-10 years’ worth of income to the coverage would the next suggestion. Once you have this number in mind, you can now shop at an affordable company to see how much you can expect to pay.
Term life insurance is the most affordable type of life insurance. It provides coverage for a specific period of time, or “term,” and pays out a death benefit if you die during that term. That makes it a great option for people who want coverage for a set period of time. For example, wanting to protect your children until they are grown up and independent.
You can get a quote in minutes and choose the policy that’s right for you. Plus, there are no medical exams required to get approved. Click Here to calculate how much your policy can cost you based on the coverage you need.
And last but not least, it’s important that the policy you are purchasing fits your budget. This way you never have to think about the cost of it. Life insurance is a buy it, set it, and forget it type of product. It should not be something you purchase and have to worry about food being taken off the table. It’s something we purchase to help us sleep better at night so we know our loved ones are taken care of if the worst-case scenario were to occur.