Appropriate amount of life insurance

[genchan]

Is there some type of guide or rule of thumb that tells you what the appropriate amount of life insurance to have? How do you go about determining something like that?

[Tree0164]

Re: Appropriate amount of life insurance

You really need to do a needs analysis.

If you have children, mortgage a starting base is usually 10 times your annual salary.

[amomof4]

Re: Appropriate amount of life insurance

On a side note, I am partial to term insurance instead of whole life. My husband perfers whole life because he use to sell it. I guess in order to sell it to others, he had to first sell it to himself. But most financial experts recommend term life.

[Tree0164]

Re: Appropriate amount of life insurance

Go term... whole life is much more expensive as well.

Consider a level term as well atleast the amount of years that your children will be out of college 25 or 30 yrs. (30 yrs would be if you plan on have children in the future)

[Denise M]

Appropriate amount of life insurance

Congratulations on deciding to buy a life insurance policy. You are now one step closer to securing your family’s future. But the next big question that arises is how much coverage do you need to ensure that your family is financially secure even in your absence? Well to answer this, you have to first ask yourself the reasons for buying a policy. Are you planning to start a family? Are you worried about your children’s education? Do you wonder how your spouse will cope financially after you die? Are you paying off any debts and mortgages? How much will your funeral expenses amount to? How much would you need for your family to continue its standard of living without your income? Consider all these factors and use the help of the many online calculators available to reach an estimate of how much coverage you will require. Alternatively, speak to a professional or financial counselor and make a well informed decision.

Denise at AccuQuote
Disclaimer: I work for AccuQuote and this is my personal opinion.

[disneysteve]

The rule of thumb, for what it's worth, is 8-10 times income. Use that as a starting point but you really need to run the numbers. Some people need more than that. Some don't need nearly that much. It depends on your situation. How many kids do you have? How big is your mortgage? Does your spouse work and, if so, how much does he/she earn? How much of your income would need to be replaced by the insurance proceeds?