How Much Life Insurance Is Enuogh?
By Steve
Before you can start requesting quotes for life online you first have to determine how much it will take to cover your needs. Everyone's life needs are different depending on their own unique personal situation. A young couple with several children will have drastically different needs than a middle aged man with no dependents.

One of the simplest methods for figuring your life needs is to simply multiply your current annual earnings by the number of years you expect to work before you retire. For example if you are currently 35 years old and plan on retiring when you are 65 then you have 30 years left that you are expecting to be working. If you currently gross $50,000 a year then you would expect to make $1,500,000 or 1.5 million over your working life time.

To directly replace that means that you will need a life policy worth 1.5 million. Now this may seem like an extremely high level of but as you will see there are some factors that can increase the amount needed as well as factors that will reduce the amount needed.

The number we came up with using the above calculation is simply a starting point, now we will discuss some factors that can actually increase the amount you should purchase.

The first thing to consider are the costs involved with death, the most obvious one is the cost of an actual funeral. The cost of an average funeral today runs between $6,000 and $10,000, this is an added expense that you should figure in when determining how much to purchase. The other possible death expenses you need to consider are medical bills, legal costs, and any applicable taxes.

The other thing to keep in mind are the other benefits of your job that will be lost when you pass. Probably the largest and most important one to consider is health insurance. If you health is currently provided by your employer then you need to figure what it will cost your family to purchase health somewhere else and add that to the amount of life that you purchase. For example if you determine that a non-employer subsdized health will cost your family $300 a month then you will need to add $108,000 ($300 X 12 months X 30 years) to the amount you need.

Now for some good news, we will discuss the factors that will reduce the amount of you need to purchase. In most cases people will subtract the amount of money they have in any current savings plan from the amount of they need to purchase. Probably the most significant factor is social security death benefits. If you have dependents and have paid enough into social security then they will be eligible to receive monthly payments. The amount of benefits that your dependents

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can receive is based on many factors to find out exactly what your family could receive you will need to contact the social security office. For our example we will use a total monthly benefit of $2000 for the family. In this case you take $2,000 X 12 months X 30 years for a total pay out of $720,000. Now if you take our original 1.5 million and add the $108,000 for health and then subtract the social security benefit of $720,000 you end up with: $888,000. This has dropped the amount you need to purchase by nearly 50%.

This is just one method of figuring your life needs, everyone will have different needs for life insurance.

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