The question isn't really how much life insurance you need, it's how much do your family or others that depend on you need if you're gone? What would it take to replace what you mean to them financially?
How much money will my family need after my death to meet immediate expenses such as medical, funeral and debt?
How much money will my family need to maintain their standard living and achieve their goals over the long run, including helping fund my spouse’s retirement?
But, how do you know if you need $100,000, $500,000, $1million, or more? The most common way to determine what you need is to perform what’s called a Capital Needs Analysis.
This is done by first evaluating your family’s needs. Gather all your personal financial information and estimate what each of your family members would need to meet their current and future financial needs. Then total up all of the resources that your surviving family members would have to draw upon to support themselves. The difference between their total needs and the total resources that can be used to meet those needs is the amount of additional life insurance that you need.
This may seem simple enough, but calculating your need can actually get pretty complicated. To make it easy for you to get a beginning sense of your life insurance need, try the Life Insurance Calculator here. But remember, this calculator (or any calculator) is not expected to be a substitute for the guidance and assistance you’ll get from working with a qualified insurance professional.
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How Much Insurance Do I Need?
The real question is how much would your family or others that depend on you need?