How Much Life Insurance Is Right For Me?

What's the hardest part of buying life insurance? For most people, it's trying to figure out exactly how much you should have. It doesn't make financial sense to spend money on protection you don't need. But you still have to make sure your family will always be comfortable - even if the worst happens.

On one hand, some financial advisors recommend multiplying your yearly income by 15. On the other hand, many recommend purchasing just enough coverage to protect your income during your working years, and put the savings into retirement investments.

So what's right for you? Before you decide to buy a policy, ask yourself these questions about your current and future financial needs.

A good choice :

4 Questions To Ask Before You Buy Life Insurance
The answers to these 4 questions will help you determine what amount of life insurance is right for you.

1. Do you have any short-term financial needs?
   You can get this figure by first adding up your short-term debts, like credit cards and car loans. Next, add in the amount you would need to cover emergency expenses like unexpected hospital visits or home repairs.
2. Do you have any long-term debts?
   Long-term debts include your mortgage, any student loans, or your children's expected tuition costs. You can use today's college prices to give you an idea of how much your children will need in a few years.
3. How much would it cost to maintain your family's current lifestyle?
   Add up how much it costs to run your household and care for your family for one year. That includes your household and food bills, transportation costs, and childcare. Don't forget to add in standard of living expenses like clothing and travel expenses. Once you've added up one year of costs, multiply that by the total years you expect to be your family's financial provider.
4. What is your familyýs total number of assets?
   Add up your family's resources. Your resources include all your savings, investments, home equity and Social Security benefits. Only add up your liquid assets - those resources that your family can easily turn into cash.

A better choice may be to simply replace the lost wage earners income. A rule of thumb is 70% replacement. If you earn $100,000 per year you would need an asset that would produce approximately  $70,000 per year in income. Assuming that you could get 7% return on your investments with little or no risk, you would need about 1 million dollars worth of life insurance protection.

We can also help you figure out your life insurance needs and answer any questions that you have. Contact us today for a free consultation about your options.

For additional information and tools to calculate your "Human Life Value", visit the consumer website www.life-line.org