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How Much Life Insurance Do You Need?

The question concerning how much life insurance do you need is a daunting one. The one thing that you must consider is you need the appropriate coverage to protect those who depend on you today. Whether is be family members or others who rely financially on you, tackling the issue of the right life insurance amount does not have to be such a challenging issue. Simply decide why you need life insurance, what kind is best and then calculate the amount needed. These tips for determining how much life insurance do you need will make the task easier.


Are You Calculating All Your Debts?
Including your home mortgage, make a list of all the debt that you currently have. The bottom line is if you have debt building up, then you are spending more money each month that you are earning. Determine if you are paying down that debt or adding to it each month, then adjust the amount of life insurance to cover those costs in the event that something happened to you. Remember that depending on the age of your passing, your family may have to survive decades without your help.


What Are You Spending per Month?
Take a close look at your bank statements and you should be able to get a good estimate as to what your monthly spending is. There is no way to protect your family properly if you have no idea how much money you need each month. While you might think that $500,000 coverage of life insurance will protect your family, take a closer look at that number and you could be surprised. If you were to pass and your family gets $500,000 in life insurance money, if they were to invest it at a 5% yearly earnings, that money is making them only $25,000 a year. If you were making more that $25,000 before you passed, at this rate they will deplete that money and be left penniless as the monthly expenses eat away instead of protect the money.


How Much Life Insurance Do You Need?
If you are putting away some money each month and living within your means, then you are doing better than most. Look at this in terms of long-terms goals though. If you were to pass when your children were still young, your spouse needs to support the family and put the kids through college without your ability to save or earn income. That life insurance money needs to stretch out, and if you can't save money today, how can your spouse save money after you are gone? Simply sit down and make a list of what your expenditures for a year would be including college tuition, and you will have a solid enough base number to start with.

Regardless how your family invests the money that you leave them after your passing, they will have bills to pay today and years from now. Unexpected expenditures like home repairs, vehicle repairs, medical treatments, and loss of a job, could be factors that affect the ability of your spouse to care for the family. Once you determine how much life insurance do you need, be safe by adding a little more coverage for those unexpected occurrences.