How much life insurance is enough?

by Jayson Cohen, American Legacy Solutions

The average adult American has coverage less than four times his or her annual income. When you consider all the things that life insurance proceeds need to find and how long the money will be needed, you begin to realize that your try need for coverage is often 10 or 15 time your gross annual income, sometime more.

Since we are all in different stages in life there are different things to take into account. Here is a short list of expenses that Life Insurance proceeds can fund. To help I have broken these down into three categories, Immediate Expenses, Ongoing Expenses and Future Expenses.

Immediate Cost: Funeral costs; Uncovered Medicare expenses; Mortgage; Car Loans; Credit Card Debt; Taxes; Estate Settlement costs.

Ongoing Expenses: Food; Housing; Utilities; Transportation; Health care; Clothing; Insurance.

Future Expenses; College – child or grandchild; Retirement.

If we truly go through the process of analyzing the above expenses we never fall on a round number of life insurance. This also makes sure we are not under insured and not spending money on Life insurance I do not need. So how do I figure out how much I need. There are two simple ways to figure out how much I would buy. First is to simply add up the numbers of your immediate, ongoing, and future obligations. Then subtract that number by your spouse’s earning, your savings, investments and life insurance you already own. This final number will give you the amount you should purchase. If you would like an easy way you can also visit, www.alegacys.com/resources and use the life insurance calculator located on that page.

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