There
is no one-size-fits-all solution, but there are several ways you can estimate
the amount of coverage you need.
How
Much Life Insurance Do I Need? There is no one-size-fits-all solution, but there are several ways
you can estimate the amount of coverage you need. Below are three common
methods for estimating your life insurance needs
Multiply Your Salary: This method is straightforward,
although it also provides the least detailed picture of your future needs. Some
insurers recommend multiplying your current salary by 10 to 15 times to arrive
at a quick estimate. For example, if you make $50,000 per year and multiply
that by 10, you’d estimate needing $500,000 worth of coverage. If you have
children, you may also want to include the cost of college in your tally by
adding $100,000 to $150,000 to your estimate.
Use the DIME Method: DIME is an
acronym that stands for debt, income, mortgage, and education. It’s a more
detailed means of estimating your future financial needs. To determine an
adequate level of insurance coverage, add up all the following: · Debt such as car payments, credit cards, and
student loans · Income for the total amount of years you need
coverage · Outstanding mortgage or home equity loan
balance
Education costs if you have children
Life insurance calculators like ours do the heavy lifting for you. By
answering a few questions, you can receive an estimate for your coverage needs.
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