Use the Free Online Life Insurance Needs Calculator from the Life Insurance Foundation for Education here.
Your life insurance needs will change
as you grow older and encounter different financial needs and goals.
While every agent has his/her own ideas about how to calculate a
dollar amount, ConsumerQuote USA has combined these methods to come
up with simple rule of thumb for the main income earner in a family.
Keep in mind that each individual situation is unique.
| Lifestyle |
Multiplier |
| Little or no financial
burden. Low mortgage or rent payment, no dependent children,
single, very low overall level of debt. |
1-3 times
annual income |
| Surviving spouse
will work, low mortgage or rent payment, little debt, no dependent
children. |
3-5 times annual
income |
| Surviving spouse
will work, moderately high mortgage payment, no excessive debt,
some money saved. |
5-7 times annual
income |
| Large amount of
financial burden, new home, young children, high mortgage, surviving
spouse wants choice not to work. |
7-10 times
annual income |
Using the above
as a general guide, it is apparent why many Americans feel they
have less than adequate life insurance coverage. For example, if
you make $25,000 a year and you have coverage for $50,000, your
policy will support your family for less than 2 years at their current
lifestyle.
Do you want
to burden your family with excessive bills and the large expenses
of raising children, paying a mortgage, or retirement funds? If
not, then buy the coverage you really need!
Note: This
is to be used as a simple guide. For a more accurate analysis of
your insurance needs, consult an independent and impartial financial
advisor.
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