How can you be sure you have enough life insurance? There are a lot of factors that go into deciding how much life insurance is necessary for you and those you care about. This is our guide on determining your own individual life insurance needs.

So many options, so little time to figure them all out…

Life insurance can seem really complicated with all of its moving parts, it can also be difficult to figure out exactly how much coverage you need and how much life insurance is too much.

How about deciding what types of life insurance coverage might be a good fit for your situation and what types of coverage might be unnecessary and can actually do more harm than good for you?

What if I told you that you may need different life insurance coverage amounts at several different points in your life? Would that make it seem even more complicated? I’m betting it would…

Here’s something that is not difficult to understand, though…

As our lives change, our needs change. As our families grow, we have more responsibility to take care of those that depend on us. As our wealth increases, our overall responsibility definitely increases as well.

Life insurance may give you peace of mind while you’re here, but life insurance becomes much more important when you’re not here but still have responsibilities that remain. Financial responsibilities.

If your family is depending on you to provide an income and one day that income stops, it doesn’t mean your family is not depending on you anymore, it just means you’re not there to help anymore. The need for that income is still there, and with mounting expenses, that need could increase over time.

Life insurance can bridge the gap between what you can no longer provide if you pass away and what you could provide if you stayed alive. Life insurance may not replace you, but it’s made to replace your income. That’s a good thing, and it can help your family in a major way if you pass away suddenly.


But sometimes a good thing goes bad

Because of how complex some types of life insurance can be, there’s a potential to make mistakes when you decide it’s the right time to buy some for yourself or a family member. Some of the most common mistakes I’ve seen people make when purchasing life insurance are…

  • Buying more life insurance than what’s actually needed
  • Buying more life insurance than you can afford
  • Not shopping multiple insurance companies and paying higher rates for the same amount of coverage that you could have gotten cheaper somewhere else
  • Purchasing a cash value life insurance policy without looking at term life insurance options, which could save you hundreds of dollars per month
  • Permanent life insurance being sold as a “cornerstone, one size fits all” retirement vehicle to anyone willing to buy, where accumulating “tax-free income” for your retirement is sold as the main reason to buy instead of the death benefit, which is the whole point of life insurance in the first place

I want to help you NOT make those mistakes

Let’s start with some basics before we help you calculate your exact life insurance needs.

In this section, we’ll cover a lot of the info you’ll need to make the right decision when deciding how much life insurance you should have.  Feel free to study up a little bit, then use our life insurance needs calculator right below to help you decide exactly how much life insurance you need.

The Two Different Types of Life Insurance

Which type of life insurance is right for me?

Which Type of Life Insurance Coverage Is Right For You?

Figure out how much life insurance you need

How to Calculate How Much Life Insurance You Need

Use this Life Insurance Calculator to help you determine how much coverage you need for you and your loved ones

It pays to have a plan

There’s no silver bullet or magic formula that will help you determine exactly how much life insurance you need because your needs are always changing.

But, once you determine you have a need for life insurance, it shouldn’t be complicated to look at your income, your expenses, and your current (and potential future) financial responsibilities as determining factors for solving your own life insurance equation.

The only other thing you’ll need to do is figure out how many years you want to replace your income for and also add in any estimated extra expenses that wouldn’t be part of your normal income picture to determine exactly how much life insurance you need.

So remember, get a good idea of what type of coverage is you’re interested in and a general idea of how much life insurance coverage you would want to have before you start shopping around for an insurance agent or looking at rates.

This can save you a lot of time and definitely decreases the chances that you will make a mistake and purchase too much life insurance, the wrong type of coverage or too little life insurance for your needs.

Have a more detailed question about life insurance? Looking for a quote? Click right here and ask Josh directly.

Good Planning, Good Saving, and Good Investing!

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