Determining How Much Life Insurance I Need

Determine how much life insurance you will need.

Tutorial

There is no simple formula for determining how much life insurance you need. You can add up these common elements and predict a good amount to invest in for your family.

Your Spouse

Does your spouse currently work? If not, how much will it cost for him or her to live comfortably after you are gone. Assume they can invest the life insurance at 6% and make an estimate as to what they will need each year - $50,000? $100,000?

Your Kids

How many kids do you have? What will school cost them when they reach college age? Add up their college costs and add this to your total.

Funeral Costs

How much will your funeral cost? You don't want your spouse or family burdened with this cost.

Debt Repayment

Add in some money to pay off any outstanding debt you may have - cars, credit cards, even your house.

Some of determining your life insurance can be added up, some is simply a guess. After performing these calculations, I rounded my life insurance needs off at $1 million.