Find out why you might have been denied life insurance and the steps to take next to ensure you get a policy that brings you ultimate peace of mind.
There are multiple schools of thought on how much life insurance you should buy for you and your loved ones — like purchasing a policy ten times your annual salary, for example. But what is the best way to determine the right amount for you? Your salary is just one part of your financial picture, and unless you have a mathematics degree, it might be a little overwhelming to figure out how to color in the rest. So we did the work for you!
Take a pause to get your financial accounts open — and when you’re ready, use our formula and life insurance calculator below to finally figure out the right amount of life insurance you and your family will need for ultimate peace of mind.
How to calculate the amount of life insurance you need
In general, you should add your:
Loans and liabilities (like your mortgage and other debt)
Income multiplied by how many years you’d like it replaced (in other words, do you want your family supported for ten years? Or longer?)
Funeral expenses (a bit awkward, we know, but it’s a big expense that could be an even bigger financial burden for your family)
Education (i.e. college) expenses and estate planning (or how you want to support your family’s future endeavors)
Together, this is what’s known as your L-I-F-E total.
Once you’ve added your L-I-F-E total, you should subtract any savings or assets (like your 401(k), investments, home, etc.) you may have that could contribute to your family’s future.
Use our life insurance calculator
We know this is more than just some back-of-the-receipt math — so that’s why we created our life insurance calculator so you can plug and plan.
Finding the life insurance policy that fits your life
Now that you know how much life insurance you need, it’s time to find a policy. And the good news is: you have options! It’s important to take the time to shop around and get quotes from several companies before you choose an insurer. (It’s free to look, after all.)