How expenses and available funds impact your decision
The number crunching isn’t nearly as complicated as it seems. Just add the expenses that you would need to pay off and subtract that from your total financial assets. It’s important to only include the expenses your family would not be able to pay off without you.
Funds - Expenses = How much life insurance you need
Available funds to consider
- Savings and investments
- Retirement resources
- Existing life insurance policies
Expenses to consider
- Mortgage or other loans
- Credit card debt
- Current and future educational needs (college, grad school, high school, etc.)
- Student loans
- Car loans
- Any ongoing childcare expenses
- Any funds to maintain a current lifestyle for those you leave behind (you may want to include annual vacations, etc.)
Consider extra childcare expenses for stay-at-home parents
The difference between the expenses and funds is a rough estimate of the amount of coverage you may need. Remember to consider potential financial gaps if there is a stay-at-home parent. While you may not have an immediate income loss in that situation, you would likely have a spike in expenses. For example, you’d need someone or several people to take care of all those household or child care activities while the primary income-earner is still working.
Need an expert to walk you through all the details? Simply get a life insurance quote online to compare prices. Then, talk to an expert agent, ask questions, and be confident that you can make an informed decision.