Once you understand the importance of insurance coverage for your loved ones, you can purchase a policy that meets your needs. Most experts suggest that you buy a term life policy with a death benefit equal to eight to 10 times your annual income. There may be other considerations that you need to factor in when making your decision. You may have a child with special needs, or you may be the sole income earner for your family. In these cases, you may need a higher amount of life insurance.
Our Term Life Insurance Calculator comes in handy to calculate the amount of life insurance you need by using several factors. Those factors include:
- Your Age, Your Spouse's Age, your Income Amounts and Assumptions about your Future Income and Investment Returns.
With this information, you can ensure your insurance policy includes sufficient funds to match your future income. Otherwise, your loved ones will need to make tough budget decisions in an already difficult season of life.
- Immediate Cash Needs such as your mortgage balance, debts and final expenses.
Debt can be one of the biggest stressors for survivors who are also juggling grief and dozens of life changes. A life insurance policy which includes adequate funds to cover as much debt as possible is an important factor when deciding how much insurance to purchase. This single decision provides a legacy to your surviving loved ones.
- Long-term Income Needs
As a primary breadwinner in your home, your loved ones no longer receive your financial support after you die. Life insurance benefits provide a lump sum of cash that can replace your lost income. Calculate how much income you will need to provide when you factor in your desired annual income, the number of years your family needs that income and any college expenses your kids may have.
- Available Resources
You will also want to factor in any investment assets that you have along with any existing life insurance to calculate just how much insurance you might need in the future.