1. How much money will be needed to meet immediate obligations?
This includes medical bills, funeral costs, estate taxes, personal loans, business debts, mortgages, college funds for children, etc.
2. How much income is needed to support your family going forward?
This includes the total annual income your family would need and how long they would need that income to last.
3. What is the present value of your existing resources?
Think savings, investment accounts, retirement accounts, spouses' income and existing life insurance.
Determine the Term
You can buy term life insurance for 10, 15, 20, 25 or 30 years. To determine which is best for you, answer the following:
- How many years until my youngest child is no longer dependent?
- How many years until my mortgage is paid off?
- How many years until my spouse and I retire?
- How many years until my other long-term obligations are met?