How Much Life Insurance Coverage Do You Need?
How much life insurance coverage you need depends on a variety of unique and personal factors. There are three things to ask yourself to determine how much life insurance you need: 1) How much money would your family need to replace your income? 2) How much money would your family need to afford ongoing obligations and future needs? and 3) How much money is required to pay off your existing debts? Refer to our guide to find the right coverage and compare life insurance quotes for free.
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UPDATED: Oct 28, 2020
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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 keyword 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 figure out how much life insurance you need and a glossary to help you understand life insurance terminology. 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.