If there is one area of concern while purchasing life insurance that is overplayed, it is deciding how much to buy. When a 35 yr. old man can buy a 25 year $500,000 plan for $34 per month, or $400,000 for $28 per month, I don’t think months of decision making are required. You need to buy the amount of life insurance that will provide at least adequate funds for your family's comfortable existence after you are gone. Shorting them $100,000 to save $6 per month does not make sense.
There are several way to figure how much life insurance you should buy. Many in the business simply suggest buying 10 times your annual salary. There are financial calculator programs that have you supply data such as your mortgage amounts, debts, current savings, the timeline your survivors will need funding, social security expected, etc. These programs then come up with an amount of insurance that should do the trick. Then you have guys like myself. I figured that I would want my wife to pay off our mortgage, pay off all business debt, maintain a $50,000 emergency fund, have an additional $400,000 for her retirement fund, $30,000 income for twenty years, and another $100,000 for whatever she desires. Oh, there is also $50,000 in there for a shrine over my grave...just kidding. But my plan works for me, because it won’t leave her short-funded, yet it will allow me to know while I am alive that if anything happens to me she will live free of any financial stress. I don’t have to leave her as much as I am, but I love her...she is my best friend...and it doesn’t cost much. With term life insurance I am able to be generous with my wife without sacrificing our current savings plan for our retirement or present life style.
You can click on this link and try out a simple, Standard Calculator that will help you see how much it would cost to replace your income. It takes into account inflation, as well as investment earnings on those funds invested from the life insurance proceeds. Or you can click here to try our more advanced Needs Analysis Calculator.
You can always call us to help you figure it all out via email or phone. Just contact us.