Choosing Your Coverage Amount: A Step-by-Step Guide
- Calculate Your Financial Obligations:
- Outstanding Debts: Mortgage, car loans, student loans, and credit card debt.
- Living Expenses: Consider how much your family would need each year to maintain their lifestyle without your income.
- Future Expenses: Things like college tuition for children, wedding costs, or even retirement support for your spouse.
- Subtract Assets:
- Look at any savings, investments, or other life insurance policies you already have that could be used by your family.
- Settle on a Coverage Multiplier:
- A common rule of thumb is to get a policy that’s 5-10 times your annual income, but you may need more or less depending on your specific situation.
- Use a Life Insurance Calculator:
- Many insurance websites offer online calculators to help you determine a suitable coverage amount based on your unique needs.
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