How Much Life Insurance Do You Need?

Once you decide you need life insurance, and most people should, then the next question is how much do you need? The answer to this will depend very much on your individual circumstances and the type of life insurance policy you are considering.

The single most important reason to own life insurance is to provide support for your dependents should you or your spouse die prematurely. The idea is to allow surviving family members to maintain something close to the standard of living they enjoyed prior to you or your spouse's death.

For single people the level of cover need not be as high, unless they wish to give something to parents, god-children or nieces or nephews.

You should ensure that any lump sum after your death should pay off any funeral expenses and any uninsured debt that you may leave behind. Include such things as mortgages, outstanding auto and credit card repayments, plus the lump sum to be used by your remaining family. As you go thru life your circumstances will change, so ensure that your life insurance policy reflects these changes.

An insurer should also consider the type of policy needed. A term life insurance policy will provide a lump sum on death, and depending on the term length can be very inexpensive. A cash-value policy will not only give a death benefit but also has an investment component but will be more expensive than the former.

Because everyone has different circumstances the best way to estimate the amount of life insurance coverage you need is to get in contact with as many insurance companies as possible and let them help you decide. Previously, this was a formidable task, involving lots of travel, phoning and time. Now, thanks to the Internet there is no problem getting all the help you need to determine the amount of life insurance coverage you should have.