Unfortunately, we cant tell you exactly how much life insurance you need.
That number is up to you and your family, and its different for everyone.
But we can help you figure it out for yourself.
Are You a Parent?
Having children is one of the most common forces that drives people to purchase life insurance.
No Interest Til Almost 2027?
To figure children into your coverage amount, take into account:
2.
Does Anyone Else Rely on Your Income?
Did you know?
Maybe you support an older parent or a relative with disabilities.
Maybe you have a unique financial arrangement with a roommate, friend or sugar baby.
Whoever it is, what would these people lose financially if you died?
Consider their current and future costs, including:
3.
Which Lingering Costs Will You Leave Behind?
Business owners, youve got more than just your family to think about when youre considering life insurance.
Take out enough life insurance to cover your personal and business debts to keep your business safe.
Whats Your Annual Income?
Calculate your annual income multiplied by the number of years of runway you want to leave your family.
But dont stop there.
Consider the factors we mentioned above your familys financial situation and needs will likely change after you die.
For years, financial advisors just advised a simple annual income X 10 formula for life insurance coverage.
The DIME formula gives more leeway for whats actually going on in your life.
Its imperfect, but at least the acronym is easy to remember.
Kris and Sam, both 35 years old, are married with two children ages 2 and 3.
They own a home together and share a mortgage with a $100,000 balance remaining.
Sam earns $75,000 a year, and Kris stays home with the kids.
How much life insurance do they need?
That might sound like a lot, but it doesnt have to be costly.
Kris life insurance policy would probably be lower, but not alotlower.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
