How Much Is too Little for Life Insurance?
It's easy to underestimate how much life insurance you would actually need. Most would say that if you have no dependents (such as a spouse or children or infirm parent) then you do not need a life insurance policy. However, even a nominal policy can pay for funeral arrangements and any charity contributions you might wish to make.
It's never too late to purchase life insurance. Find the plan you want by starting here!
Determining how much life insurance if you have dependents
If you do have dependents, then it's not a question of having a life insurance policy, but how much should you be covered for and for how long? If you died today, how much would your family need to be financially secure after your passing and for how long? At the very least, you need to offset your income or any financial support you provide. The general rule of thumb is to buy coverage for ten times your average salary (Example: You make $50,000 a year, therefore, purchase coverage of $500,000). Your family can then invest the money off your life insurance policy into bonds, and can liv e off the proceeds for at least the next decade. If you want to make sure your children's college education will be secure, this can add up to $250,000 to your life insurance policy.
Account for "hidden income" in your life insurance estimate
Then there is your "hidden income," that is, replacing the benefits such as health insurance or retirement coverage that your occupation would normally provide to you – these can add up to several thousand dollars a month! In case of your passing, your family could also be faced with the expenses of medical bills, funeral bills, estate taxes and various attorney fees.
You can start with a free life insurance quote today and then talk to one of our representatives about the specifics or any special needs of your coverage.