How Much Life Insurance do You Need?

Most of us should have life insurance. If you work and have a family, there are probably people that depend on your income to pay the bills. If you work at home, there is probably someone that relies on you for child care, running errands, and taking care of the house. Even single and retired people have funeral costs and other final expenses. We all would probably like to have as much insurance as possible, but that might cost more than we would like to pay. When deciding on an insurance policy, find out how much insurance you really need. This depends on your circumstances and what you would like to leave behind for your family.

Insurance for Breadwinners

If you bring home income into your family, you will want to get insurance based on the amount of money that your family will need to live off of. If you have young children, you will want to ensure that you purchase enough insurance to care for them until they reach adulthood, and you may want to also provide for their college costs. You may want your spouse to be able to stay home with the children and care for them at home, especially if they haven't reached school age yet. You may want to have your income replaced for a certain amount of years, or even indefinitely, with your family living off the interest. If you have a significant amount of savings built up, you may need less insurance coverage. Taking these factors into account, there are insurance calculators that can come up with the right amount of coverage for you.

Insurance for Stay at Home Parents

Stay at home parents that die could leave the parents in a financial bind, just as the family breadwinner would. When a stay at home parent dies, child care will have to be replaced. Depending on the amount of children you have, and whether you want them to be taken to after-school activities or not, you may want to send your child to a day care center, or opt for a nanny. You may want to have a housekeeper come in regularly to keep the house maintained.

Insurance for Singles and Retired

If you are single or are retired, you probably have friends and family that you will leave behind. While they will probably not be responsible for your medical bills, you might want them to give you a funeral. It may cost $7000 or more to give you a funeral and bury you. If you want to save some money, you can be cremated, which will cost around $1000. You may have this amount of money in savings. If you do, that's great! You probably don't need life insurance at all. If you don't have this amount of money in savings, you will probably want to have a small amount of life insurance to cover these expenses.