How Much Life Insurance do I Need?

How Much Life Insurance do I Need?

Buying life insurance is something that everyone should consider doing. There’s never a better time to buy life insurance than right now – no matter what your age and health might be. Even if you’re young and healthy, you should be aware that accidents happen, and you should make sure that your family is financially secure no matter what. To figure out how much life insurance you need, be sure to follow these steps:

  • Figure out your income needs – Calculate the costs of current expenses, such as your rent or mortgage payments, your food needs, your clothing needs, utility bills, travel, child care and more. You’ll want to know how much your family needs to cover all of this in case they lose your income.
  • Subtract your income from your income needs – This will allow you to determine the annual income that needs to be replaced.
  • Determine principal needed – Take the number you got in the previous step and divide it by a reasonable rate of return to come up with the amount of principal you need.
  • One-time expenses – Don’t forget to add one-time expenses, such as funeral costs and costs of outstanding debts to the principal.
  • One-time gains – Subtract one-time gains, such as payouts from other policies, to arrive at the final number. This is the amount of insurance you’ll need.

Use these steps to figure out how much life insurance you need. Contact us at CCW Insurance today for additional information.

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