How much life insurance do I need?
Your life insurance needs are dependent on your personal and financial circumstances. You can either get a rough estimate or a more in-depth breakdown of the coverage you'll need.
To get a rough estimate, multiply your current annual income by ten. That figure represents a starting point for your total coverage.
Looking for a more detailed breakdown? Use the DIME formula, adding the four areas below to determine your coverage amount.
- Debt: The total of your current debts (excluding your mortgage) plus your estimated final expenses (e.g., funeral arrangements)
- Income: Multiply your current income by the number of years that you estimate your family would need support
- Mortgage: The amount left on your mortgage
- Education: An estimate of the costs to send your kids to school and college
Evaluate how long you need coverage. If you're looking for coverage that doesn't expire for the duration of your life, whole life insurance is worth looking into. Term life insurance is an excellent option if you want coverage over a specific period, especially during a financially demanding time. To determine the correct term length for you, consider coverage that lasts until:
- You've paid off your mortgage
- Your children have finished school
- You're retired
- You've reached your savings goal
- For applicants age 20-65
- Coverage up to $2 million
- Choose between 10, 15, 20, and 30-year terms
- For applicants age 66-85
- Coverage up to $30,000
- Good for the duration of your life
If you were to pass away unexpectedly, ensuring you have adequate life insurance will ease your family's burden during an already difficult time. Help your family cover major expenses such as a home mortgage, debt, lost wages, and college tuition. It's important to carefully select the right coverage amount for your family's future protection.