The amount of coverage
you need will depend on the particulars of your situation.
We've provided a good starting formula for families and individuals who
have a
spouse and/or children who depend on their income to help determine the
appropriate amount of coverage.
1.
How much will your funeral cost?
($7,500 is the average cost of a funeral, including the burial plot).
Source: National Association of Funeral Directors (2001)
2.How much
do you owe on your home? (If you're a homeowner add the principal balance of your mortgage
to the balance of any home equity loans. Survivors can use life insurance
proceeds to pay off the mortgage immediately. Or, they can choose to save
the money and continue to make tax-favored mortgage payments. If your
home is paid for or you rent, leave this field blank.)
3. What other outstanding debts do you have? (Total the balance of any outstanding debts your survivors
may want to pay off immediately - car loans, credit card balances, and
so forth. Life insurance can help your survivors become debt-free.)
4. How much income will you need to replace? (Many financial experts recommend obtaining coverage up to
10 times your current income to ensure your family will have sufficient
funding to replace your income)