Now that you know you need life insurance, there are a few steps to take in order to find out how much life insurance you need. You won’t be able to find an exact number, but you will be able to get a pretty good estimate on how much your family would need to live. You can figure out how much you need by answering a few questions.
- How much debt do you have?
- How much do you spend each month?
- How much is your mortgage?
- What is your annual income?
- How much will your kid’s education cost?
- What is the cost of final expenses?
Debt does not include your mortgage. This could be student loans, car loans, unpaid credit cards, etc. Take into account whether you pay the debt down every month or if it increases, then calculate how much debt you have overall.
Your monthly bank statements can give you an idea of how much it costs you and your family to live daily lives. This includes paying electricity, water, internet, etc. Add up how much your family would need if you were to die tomorrow.
Calculate how much of your mortgage you have left to pay off. Keep in mind, that with life insurance, your family could pay off the mortgage all at once instead of paying monthly payments with interest, saving you money overall.
Calculate how many years your family would need support and multiply your annual income by that number. It could be the number of years until your youngest child graduates from high school. This will allow your family to live without any financial changes.
If you want your children to have the option of going to college, then you should calculate it into your amount of life insurance needed. A good rule of thumb is to calculate $100,000 for every child to account for the cost of tuition, room and board, and books.
Many people don’t think about how much it costs for a funeral, burial expenses or cremations. The average cost for final expenses is about $8,500. There are additional fees for flowers, monuments, and obituaries that can increase the cost to over $14,000.
At LifePlan Financial, we pride ourselves on our quality work, our honesty to our clients, and the reliability we provide. Getting life insurance doesn’t have to be a hassle when you use LifePlan Financial. Contact us today for any questions or get an instant term life insurance quote to get started.