Do You Wonder How Much Life Insurance You Need?

Understanding the benefits life insurance provides, is the simple part of the equation. Planning for your family’s secure future may seem daunting, but with careful consideration of your personal family circumstances, financial planning, and use of financial tools, we can help you evaluate the coverage most suitable for your needs.

Evaluate Your Needs

Conducting your due diligence and gathering of your personal information is the best way to assess your unique circumstances and needs for life insurance coverage.
Conduct a Life Insurance Needs Analysis

A income and expense needs analysis helps to project the income you (the insured) will earn between now and retirement. In addition, it calculates your net contribution to your family's current standard of living. This helps you determine how much life insurance you should have available in the event the need arises.

To conduct your income and expense needs analysis, start by gathering personal information including: Age, Income and Assumptions, Immediate Cash Needs, Long-Term Income Needs and Available Resources to apply towards your needs assessment. You will then want to take the following steps.

  • Evaluate your family’s current living expenses and future needs.
  • Gather your personal and financial information.
  • Estimate what each of your family members would need to meet current and future financial obligations.
Your needs analysis information is then determined by:
  1. Subtracting your present value of future tax payments and living expenses from your present earnings.
  2. Comparing the net contribution with the pending needs of potential survivors.
  3. Including mortgage payments, household expenses and other special expenses.
Online Financial Tool
You can also work with our Life Insurance Needs Calculator that will assess your needs based on the personal and financial information that you assessed above. You will find that generally, the younger you are, the more insurance should have to replace a loss of lifetime income for your beneficiary.
How Much Insurance Do I Need?
Once you determine your needs, the next step is to decide how much insurance to purchase. It is often recommend that you purchase 8-10 times your current annual income, but this is a "rule of thumb" that does not take into consideration current assets and any special needs your family may have. You may want to consider the following when making your final decision:
  • The amount of annual income needed to replace your earnings
  • Your age and income has a direct bearing on life insurance needs
  • The number of years that the current income will be needed
  • Other anticipated expenses:
    • The amount of yearly income needed
    • Funeral and final expenses
    • Retirement needs
    • Special needs for children or other family members
  • The average annual return on your investments
  • The expected average annual rate of inflation
Planning for your family’s secure future is less daunting a task if you are prepared and understand your family’s needs. Determining those needs and purchasing the appropriate amount of insurance will allow you to have peace-of- mind and to enjoy life to its fullest.
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