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Look at your current and future needs. If you have a family or a spouse that is largely dependent on your wages to live, you might want to make sure that you have a life insurance that will cover your family and spouse for 20 years or more. Some people usually go with the philosophy that you are better off over insured, then not having enough insurance.
Some financial planners state that at minimum, you should at least have a policy of 15K to cover burial and all final expenses. In addition, some financial planners advise you to purchase life insurance by multiplying your salary, for instance, purchasing 5 times or 10 times the amount of your salary.
Other financial planners, advise you to look at your family or spouses expenses for the amount of years that you want to cover them and figure out how much money they will need to live comfortably. Many financial planners and life insurance agents have special formulas that can figure out how much insurance you need for your age and level of coverage you want to provide your spouse and children.
Many people want to make sure that their family is very comfortable in the event of a death. For instance, a policy might take into consideration the cost of a home, car loans, maintenance of assets and education costs for children. Usually the more dependents, the more insurance is necessary.
Some consumers that are buying life insurance don't necessarily purchase it to care for dependents, but to cover estate taxes or to give an inheritance to their heirs. Usually these types of policy holders are already well off or no longer have bread winning responsibilities that make it necessary to care for small children or a spouse.
Lastly, if you are single, do not have any dependents and have an adequate amount of savings to take care of any final expenses such as funeral costs and taxes, you might decide you do not need to purchase life insurance at all.
One thing is for certain, make sure you put lots of thought into the amount of life insurance you do purchase and talk to a financial planner, accountant or insurance agent to learn more about how much life insurance, you personally should purchase.
The question of how much life insurance do I need is not an easy one to answer and it's certainly not one that I can answer for you in an article on the Internet. What I can do with this article however, is to give you some things you can think about and some general guidelines to help you determine what would be best for you and your family.
There are many factors that will affect the amount of coverage that you need. Are you healthy? Or do you have pre-existing medical conditions that put you at substantial risk? How many people are depending on you to pay the bills? You'll need to have enough money to cover funeral expenses and estate taxes. You may want to have enough insurance to pay off your mortgage balance or credit card bills. If you have young children you may want to keep enough coverage to pay for their college education.
You'll need to consider your current living expenses minus your surviving relatives income so that you can have enough insurance to cover your families living expenses. You'll also have to estimate the number of years of income you will need. For example if your kids are in high school they will be getting jobs and moving out so you won't need as much as if your children are still in diapers.You also need to consider various tax issues in your estate planning.
As you can see, there is a great deal to think about when trying to determine the right amount of life insurance. It would be best to consult with a competent financial professional to help you figure out exactly how much life insurance you need. If you still want to get an idea on your own of how much life insurance you need before consulting with the professional there are many websites that have life insurance estimation calculators. Do a google search for life insurance calculators and you'll find plenty of these websites. Once you get on the site you simply fill in the boxes with the information that they ask for and when you get to the end they give you an estimate with a dollar amount telling you how much coverage you should have.