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How Much Term Life Insurance Should I Buy?

You're ready to buy term life insurance. But how much? And for how long? Even the best term life insurance falls short if you don't have enough. Then again, overdoing it buying term life insurance policy doesn't make great sense either, especially if you're watching your budget.

Conducting your own term life insurance needs analysis starts with a common sense approach. Here are some things to consider.

Buy term life insurance to equal a multiple of your salary.

Many people buy term life insurance with the idea of replacing lost income. But what exactly does that mean? Opinions vary, so you might see recommendations for buying term life insurance policy that is five or seven to ten times your current salary. It boils down to figuring out your own individual current and future financial needs.

When calculating the best term life insurance amount, ask yourself:

  • How much money does it take to run the household? (Rent or mortgage, food, etc.)
  • How much is my current income?
  • How much do we have in savings and investment accounts?
  • How much is there in our retirement account(s)?
  • How much do we have in other life insurance policies?

Try our Term Life Insurance Calculator and see options for how much coverage you should look for.

Buy term life insurance to support loved ones for a specified number of years.

When buying term life insurance policy, the term itself can be just as important as the coverage amount. Ask yourself:

  • How many years will my partner/spouse need until retirement?
  • How many years until my dependents are finished with college or can support themselves?
  • How many years until our home is paid off?

Buy term life insurance to pay for immediate expenses.

When buying term life insurance policy, many think of immediate expenses such as the mortgage, loans and food. But what about other not-so-obvious costs? Ask yourself:

  • How much are final expenses likely to cost?
  • What if there are medical bills?
  • Is there enough money to cover a leave of absence if my spouse needs time to get back on track?

Buy term life insurance to pay for outstanding debts.

If you're like most, you've got some debts. You may want to buy a term life insurance plan that covers:

  • Credit card debt.
  • Auto loans.
  • Personal loans.
  • Mortgage and second mortgage.

Buy term life insurance to pay for college.

The bottom line? If you're buying term life insurance policy today hoping it will help your kids get through college years from now, do your best to calculate a realistic cost.

 

Start your application online now or call one of our licensed agents at 1-800-771-5144.