Knowing how much life insurance you need is a one of the main questions asked. The answer is different for everyone because it depends on your situation and where you are in your life. Someone who has a family is going to want to make sure that if anything were to happen to them, that their family is going to be financially covered. Are you going to cover your kids? Is your spouse going to get life insurance? These are all questions that come into consideration when you have a family and begin looking into life insurance.
First you are going to want to figure out how much you can afford. More coverage is going to cost you more each month, so make sure to run the numbers and see what price will best fit you and go from there to figure out how much coverage that price can get you. Remember that working with an insurance broker can help you to get the best price on coverage that will fit your needs.
Now you will need to figure out how long you need to be covered. How old are you kids? Many people will want to have coverage until their children reach the age of twenty-five. For example, if your children are five then you may want to get a twenty-year term. If they are older then you can get a shorter term. This is just a rough estimate, ultimately it is your decision on how long you want to have life insurance.
Since you have figured out how long you need to be covered, you can figure out about how much you will need. Some say you should get ten to fifteen times your income in order to cover all of your expenses and debt. Another way is to figure out your annual salary and multiply that by the amount of years that you will need coverage. You will also need to add any of your debt so you know how much more you will need to cover things such as credit cards, car loans, and mortgage balance. If you want to add in your children’s college cost and any other expenses, then you will want to add that to your total amount needed.
As stated earlier, the amount differs for everyone. If you have multiple children, you will likely be needing more coverage than you would if you only have one child. If you are new to insurance, finding an insurance broker may be a good idea for you because of their knowledge of the business.
This article was written by Nicole, an intern at Irish Mortgage Brokers and Yes.ie from the USA