How much life insurance should one buy? - Part 15
By admin on July 26th, 2010One of the big questions that comes up when financial planning is “how much life insurance should I buy?” To answer this question, you need to first look at your individual circumstances and make a decision based on your family’s needs.
The first thing you should determine is whether you really need life insurance at all. Does someone depend on you for their livelihood? If not, are you planning on starting a family soon, or will you be taking over care of an elderly relative? If you know that someone will financially depend on you in the near future, or if they already do, you need life insurance.
How much life insurance you need depends on the following factors:
*Expected funeral expenses
*How much debt will have to be discharged when you are gone
*Whether someone else in the household works as well
*Amount you want to put toward children’s growing up expenses (including college)
*Regular household expenditures
A good rule of thumb is to cover yourself for 5 to 7 times the amount of your annual income, after taxes.
No tags for this post.
