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Life and Health


By February 3, 2014No Comments

The answer depends on the circumstances and financial situation of your family.

However, industry experts recommend using this five-step approach to come up with an estimate:

  1. Calculate your final expenses. The national median cost of a funeral in 2012 came to $7,045; other costs include uncovered medical bills and estate-settlement fees. As a rule of thumb, total expenses will be about $15,000.
  2. Add up your debts: credit card balances, car loans, mortgage or home equity loans, student loans, etc.
  3. Estimate the ongoing expenses your family will need. Start by determining how much a year your loved ones would need to maintain their lifestyle, subtract family income from other sources (such as your spouse), and then multiply the result by a factor based on the number of years they would need this income. According to financial analysts, the multiple will vary between 10.8 for 10 years to 20.4 for a 30-year period.
  4. Factor in long-term financial needs of your family. For example, the average annual cost of a child’s college education in 2013-2014 varies between $8,893 for in-state students at state schools to $30,094 at private colleges, according to the College Board. The younger your children, the longer until they reach college – and the more they’ll have to pay.
  5. Add the total of the first four steps, and then subtract the financial resources of your family: other life insurance policies (such as group life through your employer) and savings and investments you won’t need for retirement.

The result should give you a good estimate of how much life coverage you need to provide financial protection for your family. We stand ready to help you select the policy that offers the best value for your insurance dollar.