Ask An Expert
How much life insurance do I need?
You know you need life insurance in order to protect your family when you are gone. They will have enough to deal with when you pass; they don’t need money added to that list.
But how much life insurance do you need? The simple answer is usually 10 to 12 times your annual income. But if that seems like too much, you can break it down using the DIME method.
D – Debt.
How much debt are you leaving behind? Make sure you have enough life insurance to pay it all off: credit cards, student loans, medical bills, whatever the debt may be.
I – Income.
You don’t want your spouse to be scrambling to replace the loss of your income while he or she is also mourning your loss. Make sure you have enough life insurance to cover your income for at least a few years while he or she adjusts to being gone. Stay-at-home parents, this would include the cost of paying someone to do all that you do for the household.
M – Mortgage.
You would hate for your family to have to move out of their home after you are gone because they can no longer afford the mortgage on it. If you have a mortgage on your home, make sure you have enough life insurance so that your family can pay it off with the proceeds.
If you have young children and you plan to help them afford college, make sure you have enough life insurance in order to do so.
If you take a look at your debt, income, mortgage, and education this will let you know how much life insurance you need in order to ensure that your family will be covered when you pass away. Let them be able to focus on mourning your passing and not be faced with a mountain of bills.