Let’s say you’ve already gone ahead and done the responsible thing: you got a life insurance policy for yourself and one for your spouse as well. Great! Or, let’s say you are considering getting life insurance, but haven’t quite gotten around to it yet. Either way, you will need to figure out how much life insurance you really need to purchase.
Life insurance is designed to provide financial assistance to your family after you pass away. One of the most immediate needs is for the life insurance policy to pay for the costs associated with your funeral, as well as whatever associated medical bills that your health insurance policy doesn’t cover. How do you figure out how much money you need for this? Your insurance agent can assist you with that calculation. You might also want to factor in extra expenses, such as the cost of having relatives from far away come to the funeral.
How much money does all of your debt, put together, add up to? The other big reason many people purchase a life insurance policy is to help their surviving spouse be able to pay off the mortgage, (as well as any other large debts that are owed). If you are gone, then so is the income you were making. Figure out how much debt your family would need to pay off, and speak with your insurance agent about it, so the agent can help you make sure that you have enough life insurance to cover it.
What else should you think about, when trying to figure out how much life insurance you need? You may want to make sure that your life insurance policy will include enough money to help your children pay for their college education. Many people also want it to include something extra, perhaps to be used to help your loved ones recover emotionally from your loss. For example, the money can be used for a family vacation, or a relaxing cruise. It’s a good idea to speak with your insurance agent about all of the things that you want your life insurance policy to take care of. That way, you can be certain that you have, in fact, purchased enough life insurance.
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