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