With so many life uncertainties, you may need to review your current life insurance to determine if it’s adequate. But how much life insurance do you need? To be fair, it’s not a straightforward answer. However, with the help of Hanneken Insurance Agency Inc. of Little Falls, MN, figuring how much life insurance you need should be easy.
Here are a few steps to guide you.
Figure out your financial picture
Are you about to invest in life insurance? Painting a picture of your financial plan would be a great place to start. Where are you financially, and where are you headed? Better yet, you can involve a financial advisor to identify gaps in your plan and figure out how life insurance can plug the holes.
Why do people need life insurance?
If you are to determine the amount of life insurance you need, the first step is to determine why you need life insurance in the first place. Most people need life insurance to:
- Finance final expenses
- Transfer wealth to dependents
- Pay for debts
- Supplement retirement income
- Ensure the success of their business
After identifying why you want life insurance, the next step is figuring how to calculate your life insurance.
How to calculate the amount of life insurance you need
There are numerous methods to compute how much life insurance you need. Let’s look at some.
- Multiply your income by 10: It’s an outdated model, but it can help estimate the life insurance you need.
- The DIME method: This method considers your debts, income, mortgage, and education (DIME) in the computation. This method is better than the “10 times method,” but it ignores your current financial assets.
While there are numerous life insurance calculation methods, the general rule is that the life insurance you need equals your financial obligations less your existing assets that can settle bills.
Buy life insurance today!
If you are still unsure about calculating your life insurance, don’t hesitate to contact Hanneken Insurance Agency Inc., serving Little Falls, MN and its environs. Besides, we will help you choose a life insurance plan that fits your needs and budget.