How much life insurance do I need?

This is a complicated question, and can range from nothing to millions depending on multiple factors including current expenses the insured is responsible for, how much they make, what they want as their final wishes (final expense), and how much they already have in savings and investments to subtract from what they'll need- so let's start at the beginning.

Current expenses include all bills, car payments, loans, and anything else that would become a burden to the beneficiary lest the insured pass. It is a good idea to be generous when guessing, as being off by few thousand won't raise a premium by much. Don't worry, the premium payment can almost always be changed down the road one way or another if it becomes a overbearing.

It's also good practice to include a few years worth of the insured's current income into the death benefit of the policy, especially if the insured is the breadwinner. This will ensure that those left behind won't fall under financial stress due to a newfound lack of income in the household. Anywhere from 3-5 years will suffice if necessary, however, this step is optional if the insured simply wants to cover a burial or cremation exclusively.

Speaking of burial and cremation, how much do final expenses usually cost? Well, the truth is that's up to the policy owner. ‘Final expense’ is often referred to as many things, including burial insurance, and should not be understood as a type of life insurance, rather a subcategory of whole life insurance, typically sold to seniors. The appeal of final expense is self explanatory- it covers just what the insured wants for their final wishes. If this is simply a cremation, many crematoriums sell plans for around $1,000, and often don’t necessitate a life insurance policy. However, if the insured wants an actual casket, they should expect to have $12,000-$20,000 sitting around at the time of death to pay for the expenses a funeral requires. It’s important to highlight at the time of death, because finances can be quite sporadic, and it doesn’t matter if someone has $12,000 one year but loses it the next and passes away leaving nothing. A final expense life insurance policy protects from this uncertainty and provides peace of mind peace of mind for these last only, occasionally leaving a small amount behind for the remaining family.

The last financial factor to take into account is the amount in savings, capital, & investments the insured has in their name. These are subtracted from the lump sum that we have managed to amass so far from debts and loans, supplemental income, and fulfillment of final wishes. After all factors are correctly approximated and calculated, the amount needed to satisfy the financial hole a passing would leave can be rightly determined.