That question is far too open-ended.
Are you married? If yes, are you the primary breadwinner? Do you have children? Investments? Savings?
Here's my situation:
I am married, with three children. I have the primary income.
We have a mortgage, a car payment, and some consumer debt.
I added up all of the debt, as my base level of insurance. My family will not be burdened with debt if anything happens to me.
To the base level, I added 5 years of my net income. Without changing a thing, my family will be supported exactly as is for 5 years if I die. They won't, however, have the same level of expenses, due to the base level of insurance paying off all debt. All of my expenses also evaporate. One car will be sold. One less mouth to feed and body to dress.
I figure with the lower expenses and no debt, my insurance will support my family for 10 to 15 years if my wife manages the money right and continues to work.
Answered by
princewally
at
Dec 2, 2009 11:53 AM
It really depends on what you are trying to accomplish. Ask yourself, "Why do I need life insurance?" The answer to that question will help dictate how much life insurance you need.
For many people, they need life insurance to replace their income if they die and can no longer provide for their family. Figure out the amount of money your family would need to invest to replace your income. Another method involves paying off debts, adding in other final expenses including potential medical bills, and then adding a few years' worth of income on top.
Both of these methods should be in the same area. While it's not a final answer, it is a good place to start a conversation.
For non-income earning spouses, they need to consider how much it would cost to replace their services to the family. For instance, with kids in the house, think about the cost of transportation, meal preparation, tutors, housekeeping, accounting, missed days from work, etc.
There is no single answer for this, and rules of thumb usually fall short. Talk with your loved ones about it, pick a method that works for you, and take the next step. It is a personal decision. Ultimately, you have to decide and take action to protect your family.
Answered by
Clarifinancial
at
Dec 2, 2009 12:06 PM
Valerie-
As the others have stated, it really depends on what you're looking for the life insurance money to do. Is it pay off the house if something were to happen to you? Is it to supplement your income so that your spouse (if you have one) will not be stuck trying to raise kids off his income solely? Your need and desires will lead you to how much life insurance you need. If it's any help, check out an article I did that walked through the process that I did to determine how much life insurance I needed for my family.
Answered by
jeffrose
at
Dec 10, 2009 01:13 AM
The Allstate Insurance site have good calculators to compare whole vs term payouts and principals.
Hope these help to figure out what returns you would get. Kevin, Allstate Insurance Advocate
Answered by
kevin33
at
Feb 16, 2010 12:57 PM
