How much life insurance should I purchase?
There's no way of knowing precisely how much money your loved ones will require if you pass away.
However, there are three simple methods for estimating that amount. Experts advise erring on the side of caution and purchasing a little more life insurance than you think you'll need.
Option 1:
Multiplying your gross (or before-tax) income by 10 to 15 is one of the simplest ways to get a rough sense of how much life insurance to buy. Another popular formula suggests adding $100,000 to that figure to cover the costs of each child's college education.
Option 2:
Calculate the immediate, ongoing, and future expenses that your family or loved ones would face if you died. This can include anything from funeral expenses to rent or mortgage payments to college tuition.
Add up the financial assets that you and your family already have. This could include a spouse's income, savings, assets, and existing life insurance. Subtract your available funds from your projected expenses. The difference between the two figures is the approximate amount of life insurance that should be purchased.
Your agent can help you with these calculations, and advise which policy type best fits your needs.