No one wants to think about their death.

But unfortunately, it’s part of life. And it’s best to plan ahead with issues such as life insurance – which includes figuring out how much insurance you need.

Key Points:

• If you need life insurance, decide if you want term or whole life insurance.
• Figure out how much life insurance you need based on your expenses and income.
• You can use the DIME method (Debt, Income, Mortgage, Education) to gauge what you’ll need.
• Take this quiz to see if you’re on track to retire ^(Sponsored)

First, what kind of life insurance do you need?

There are two.

The first one is term life insurance, which is less expensive than whole life insurance. With term, the policy is active for a set period – between 10 and 30 years – and doesn’t offer any payout if you outlive that set term.

Whole life insurance covers your whole life – as long as you pay your premiums. While it’s more expensive than term insurance, it may be worth the cost if you want to provide the maximum amount of protection to your family.

Second, figure out how much insurance you’ll need.

For many of us, it’s important to have a death benefit that will provide funds to cover expenses your family will need money for. For example, if you want life insurance to replace your income upon your death, you’ll want a policy with a higher benefit than if you just want one that will cover your final expenses, such as burial.

Let’s say you want to replace your income.

You’d start by multiplying your current income by 10. So, if you make $85,000 a year, you’ll need $85,000 in life insurance. Some will add in another $100,000 per child or grandchild to help cover the skyrocketing costs of education.

According to Guardian, “Based on the value of your future earnings, a simple way to estimate this is to consider 30X your income between the ages of 18 and 40; 20X income for age 41-50; 15X income for age 51-60; and 10X income for age 61-65. After age 65, coverage is based on net worth instead of income.”

Or, use the DIME method (Debt, Income, Mortgage, Education).

Starting with debt, you’d add up all existing debt others would have to pay once you pass. With income, you’d multiply your annual income by the number of years you think your family will need your financial support after you pass. Again, let’s say you earn $85,000 and you want 20 years of coverage, that would give a figure of $340,000.

Consider any mortgage payments plus property taxes. You may also want to tack on $100,000 per child or grandchild for their education. Once you figure all of that out, there’s your magic life insurance policy number.

And if you need help, it’s never a bad idea to work with a financial advisor.

A Quote in Minutes

Even if you’re in a similar financial position and unsure about the exact amount of coverage needed, it’s always wise to get a quote and explore your options.

A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. With affordable rates and customizable policies, life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.

Click here to visit our website and learn how to get a quote in just a few minutes.

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