How much life insurance do I need?
- One rule of thumb is to budget 1% of your pre-tax income for life insurance. Of course, everyone's needs are different, so you may need more or less insurance for your situation. But even a small amount of coverage can make a difference and help protect your family from financial uncertainty.
- If you want to make certain you are selecting the right amount of life insurance for your family, take the following steps.
- Determine how much debt you have, other than your mortgage. If you have any other debt than mortgage debt, then you are probably spending more than you earn. Do you add to your debt each month? Do you pay it down each month? If you have debt beyond your mortgage, you should buy more life insurance to pay it off.
- Determine how much do you spend each month. The most accurate way to determine your monthly needs is to set up a budget. Use your bank statements to estimate your spending or a tool -- there are many budget planners available online -- to determine how much you plan to spend each month.
- Another way to figure out home much life insurance you need is to determine how much insurance you can afford. You can use the TruStage Life Insurance Calculator to compare different insurance coverage plans.
- You can’t protect your family if you don’t know how much you need every month. Don’t just guess. You might think that $100,000 in life insurance coverage is sufficient. After all, it’s a lot of money. But give it careful thought. You may find that this is not enough.