how much life insurance do i need

Manually Calculate How Much Life Insurance You Need You can also determine your life insurance need with a pencil, paper and this basic equation:

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Financial obligations you want to cover] – [existing assets that can be used toward bills] = Your life insurance need

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Here’s what you might include in “financial obligations you want to cover”

Income replacement: Multiply the salary you want to replace for the number of years you want to replace it. You want this income replacement to cover current and future expenses.

A mortgage: You can include the balance of a mortgage so your family can stay in their home without fear of losing it

If income replacement (above) would already cover mortgage payments and other expenses, no need to add more mortgage money.

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Other large debts: Would your family struggle with other large debts if you passed away unexpectedly? If so, add those in.

Children’s college tuition: Add tuition money to ensure your children can pay for college if you were no longer around. Here’s what you could include in “existing assets that can be used toward bills

Existing life insurance: If other life insurance is already in place to provide a financial cushion, subtract that amount.

Be careful about relying on supplemental life insurance from work though—since it doesn’t go with you if you leave a job, you can’t be sure you’ll have it later on.

Funeral expenses: Many people want life insurance to cover funeral and final expenses. If this cost isn’t part of a larger policy, some people buy burial insurance.