Three Easy Ways to Estimate Your Need
There’s no way to know the exact dollar amount your loved ones would need if you were to pass away.
But there are three easy ways to get an estimate of what that amount would be. (Keep in mind that experts recommend erring on the side of caution and buying a little more life insurance than you think you may need.)
Calculation 1:
One of the simplest ways to get a rough idea of how much life insurance to buy is to multiply your gross (a.k.a. before tax) income by 10 to 15. Another popular formula recommends adding $100,000 to that amount for each child’s college education expenses.
Calculation 2:
Another way to get a ballpark figure of how much life insurance to buy is to calculate the following:
- Add up the immediate, ongoing and future expenses your family or loved ones would incur if you were to pass away. That could mean everything from funeral costs to rent or mortgage to college tuition.
- Add up the financial resources your loved ones already have. That could mean a spouse’s income, savings, investments and life insurance that’s already in place.
- Subtract your financial resources from the anticipated expenses. The difference between the two numbers is the approximate life insurance to buy.
Calculation 3:
Perhaps nothing is easier than a life insurance calculator, which is why we developed our Life Insurance Needs Calculator. Just answer a few questions to get an idea of how much life insurance to buy.
