Asking yourself 'How much do Life Insurance do I need?' is a very important question when calculating your insurance requirements. It is something that is unique to every single consumer. The amount that you apply for may be questioned by the Life Insurance provider that you are applying to, so it needs to be a realistic and justifiable amount.
Most insurance websites will have some sort of Life Insurance Calculator to assist you in ascertaining a sum assured that is right for you. The idea is to enter a number of variables in order to find out an approximate amount of Life Insurance cover that is right for you.
An insurance calculator will look a little something like this:
Existing Life Insurance cover in place and any capital or savings - $....Current and future educational costs for your children - $....
Outstanding mortgage and loans - $....
Further outstanding debts - $....
Funeral costs - $....
A lump sum to keep your family accustomed to the lifestyle that you currently provide, basically replacement of income that is usually advised to be around ten times your annual salary - $....
The answers to the above 6 questions will be used to calculate the amount of Life Insurance that you require.
An example is as follows:
1. $20,000
2. $30,000
3. $100,000
4. $10,000
5. $1,000
6. $300,000
A life insurance calculator with the above details input into it will answer the question 'How much Life Insurance do I need?' with a figure of around $420,000 which takes into consideration inflation rates for future years.
For a thorough breakdown of your family's unique insurance requirements it is best to speak to a financial adviser or broker who will be able to offer free independent advice. They will be happy to answer the question 'How much Life Insurance do I need?'. Alternatively if you feel that you are comfortable obtaining cover yourself visit an insurer on-line, application processes for Life Term Insurance are very straightforward. For a breakdown of all of the information that will be required of you when making an application for Life Term Insurance please see our Life Insurance Questions page.
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