You know that you need life insurance, but are you sitting in front of your computer wondering how much you need?
If so, you’re not alone.
The Importance of Knowing How Much Life Insurance You Need
There are many reasons why individuals procrastinate when purchasing life insurance. Some are overwhelmed by all the options, while others believe coverage is too expensive. However, not knowing how much coverage to purchase can also stop many people in their tracks.
The Calculation
In a nutshell, you need enough life insurance to cover all your financial obligations. Calculating this number can be accomplished in a handful of ways.
Income method
The easiest way to determine how much life insurance may be sufficient is to multiply your Income by a factor of 10. For example, if you earn $50,000 a year, consider purchasing a $500,000 policy.
DIME method
A more accurate approach is the DIME method – Debt, Income, Mortgage, and Education. For this method, add the following calculations together to develop a total life insurance need:
- Your current outstanding Debt
- Multiply the number of years of support your family needs by your Income
- Add the amount required to pay off your Mortgage
- Estimate the cost to pay for your children’s higher Education
Financial calculators
A life insurance calculator is the most accurate way to calculate your life insurance need. There are many calculators online, but make sure you use one from a reputable source. If you are unsure, seek help from a licensed professional life insurance agent.
Professional Assistance for Life Insurance
Our finances are constantly changing over time. Since things are always in flux, determining the amount of life insurance you need right now can be simple.
Making sure you have enough coverage to address your family’s basic needs is a great start. For assistance in developing a more precise figure and choosing the right type of life insurance, connect with me online to schedule a complimentary life insurance review.
