How much life insurance coverage do you need? This is one of the most common questions we are asked by our customers and arguably the most important. The key word here is ‘coverage,’ which includes not only the face amount of the policy but also the length of the coverage.
The short answer is it depends on your unique situation. There is no magic formula that can be applied to everyone. And as life insurance professionals, we are careful not to paint everyone with the same broad brush.
There are, however, some important guidelines that every life insurance applicant should consider:
- In the event of your untimely death, how much money would your family need to replace your income and how long would they need to replace it for?
- How much money would your family need to afford ongoing obligations and future needs such as health care expenses and college costs?
- How much money would be required to pay off your existing mortgage and other debts?
There may certainly be other considerations at play, but these guidelines provide a good foundation for determining your life insurance coverage needs.
QuickQuote also provides a handy Coverage Amount Calculator you can use to hone in on a figure that is more appropriate for you. Also, stay tuned for a more extensive QuickQuote Article on the subject in the coming weeks. It will include areas of discussion such as life insurance company financial guidelines (yes, they exist), options for future coverage amount increases and policy conversions.