How To Determine Life Insurance Need?

  1. 4249 POINTS
    Gary Lane
    President, Lane Independent Agency, Southern California
    Some say twice salary, some say ten times. They can both be correct. Look at these things: are you married, have kids, are they in college or heading to college, do you own a home, have a mortgage, how much is left on the mortgage. After considering all of these, you will find a number between 2 and 10 times your annual income. That is the number to choose. Talk with your agent. Thank you. GARY LANE.
    Answered on May 27, 2014
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    It is difficult to determine the extent of suffering others will experience when we pass.  A breadwinner is important but so is the person caring for children.  There will be loss, economic loss, regardless of who dies.  It would be wise to have a frank discussion and determine what would happen.  I suggest though, that most breadwinners need close to $1 million of life insurance.  That will produce $100,000 of income at current interest rates.  
    Answered on May 27, 2014
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  3. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is an excellent question! There are a lot of different thoughts on the answer. I always ask two questions, and one used to drive my uplines crazy, but I always believe client over profit, so I ask. The first is what do you want it to do? The second is what can you afford to spend? It is all well and good to want a million bucks worth of insurance, but if you can't swing the premium payments, then it isn't realistic. We look at what you can safely afford to spend, and then we get the maximum amount of insurance for that amount. If that amount only covers the funeral expenses, it is still a gift of love to your family. If it gets your family financially set, that's even better. Please contact an agent that you can trust and have them help you. If you would like help, please feel free to contact me, okay? Thanks for asking!
    Answered on May 28, 2014
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  4. 5877 POINTS
    Stan Cox II
    Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
    There are a number of methods used to determine how much life insurance is needed. The simplest method is to multiply a person's annual income by 10. Another method is to determine how much income would be needed in the event of the insured's death in order to maintain the lifestyle of the surviving immediate family including school tuition, etc. Then based on a percentage of annual gain you feel you can count on by investing, determine the amount needed to invest in order to achieve that needed annual income, minus current liquid assets, and that's the amount of insurance needed.
    Answered on September 2, 2015
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