How Much Do I Need?
While most people guess at what they need and round to a nice sounding number, there are more scientific ways to determine the insurance purchase amount. One way, that begins to touch on the family's need to replace income requires that you multiply family income times 5 and then add in the mortgage. If both spouses work, coverage should be divided in proportion to incomes. The possible weakness here is that a younger person with a larger family would need more than this multiple, while an older person with grown children would need less.
We can do a more sophisticated financial analysis upon request.
Most insurance companies will allow up to ten times income.
The main reasons people buy life insurance are:
1) replace income until children are 20 to 25,
2) provide spouse income typically 60% of current income,
3) cover mortgage
4) educational expenses
5) final expenses
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