There are a few different ways to determine the amount of life insurance you need. Below are the major categories that most experts agree are considered in determining your need for life insurance.

INCOME REPLACEMENT

What will your family need to enable them to maintain the same standard of living if you should die prematurely? Income needs are usually greatest when you have minor children. Most experts agree that you will need 5 to 10 times your annual income for replacement purposes.

MORTGAGE BALANCE

Just as the heading implies, money will be needed to pay the balance of your mortgage. If you rent, you will want to consider putting money aside for a "rent fund."

DEBT REPAYMENT

If you have a car loan, home improvement loan, credit card balances, etc. these will need to be considered when determining the amount of life insurance you need.

EDUCATION FUND FOR CHILDREN

Educating children can be a very expensive task. The average cost of tuition for a 4 year, in-state public university is approximately $3,000 and $17,000 for a private university. Current cost for room and board is about $5,000 per year. Books and other fees should be included as well. You will want to consider this for all children.

FINAL EXPENSES

Final expenses refers to items such as final medical and hospital costs and funeral expenses. The average funeral in America today costs approximately $7,500.

EMERGENCY FUND

You will want to have money set aside for your family to cover major home repairs, auto repairs and medical emergencies. Half of your annual income should be sufficient to cover the emergency fund.

MISCELLANEOUS EXPENSES

You will want to consider an additional amount for this category if you have special needs children, aging parents that are dependent on you or other important, unique needs. Click here to go to our needs analysis table to help you determine your current life insurance needs.