Most people put the idea of life insurance on the back burner, but in reality it is one of the most important decisions you’ll make during estate planning. Without the right amount of life insurance, your family and your assets could be at risk. Determining how much life insurance you need depends on a variety of factors, but to help get you started, compare your financial health with these situations.
When You’re Single without Children
If you have no dependents, you won’t require a large amount of life insurance, but you should still have basic coverage to help pay for funeral expenses and any debts you may have accumulated.
When You Have Dependents
If you’re married or have kids, your family may suffer a serious financial loss upon your death. Therefore, you need to assess your financial situation by addressing the following questions:
- What expenses will your family have to immediately deal with?
- How much does your salary currently contribute to your household income?
- How long will it take for your family to make up the lost income?
- How much money would you want to contribute (or you plan to contribute) to your children’s’ education?
- How much money do you plan on leaving to your beneficiaries?
There is no right or wrong amount when it comes to picking a life insurance dollar amount. Whatever you decide on should be enough to help pay immediate expenses, cover your funeral costs and take care of your loved ones. Only you know how much money you’ll actually need, but sitting down with an estate planning attorney to get started can be beneficial. An attorney can help you assess your financial situation and pick out the right amount of life insurance to protect your family and your assets.