August 26, 2013
Life Insurance: How Much Should You Have?
When it comes to life insurance, the two most common questions are what type and how much. If you’ve already decided which type of life insurance you want, either term life or whole life, you may be wondering how you can determine how much life insurance you need. This is actually a very personal decision, and it depends largely upon your family’s standard of living and how much you can afford in your life insurance premiums. A life insurance policy needs to provide for your family once you aren’t around. Ideally, the interest on the money received through the insurance policy will be enough to at least provide for your spouse.
When calculating the amount of insurance you need, you’ll need to determine the amount of assets and debts that you will have once you pass on, and then figure out how much your family will reasonably need to live on after you pass. The difference between this amount and your assets and debts is the amount of insurance you’ll need. If you have significant debts, you’ll need more insurance. This is because your estate will be used to pay off your debts before your family receives anything.