How much life insurance do I need? So you wanted to know the amount of life insurance that will be sufficient to cover your family when you won’t be around. In this article we have tried to answer that question, so read on…
People feel and hope that some things to decrease, but they go up, for instance the cost of petrol. They feel some things to go up, but instead they go down, for example the price of shares. Sometimes you wanted things to go up instead they went down, like your savings. Your blood pressure you thought would go down but it shot up.
In this modern world, the cost of commodities keeps on rising. Under such circumstances in case the bread winner breathes his last then you can imagine the situation his family will be put in. Thus it has become a must for you to have a life assurance to shield your family. Nevertheless how to know how much life insurance do you need? Let us look into that aspect of insurance.
How to calculate what amount of life insurance we require?
It is not easy to have a usual computation of how much insurance you need. However you can take into account several aspects and arrive at an amount for which you can take up an insurance policy.
First of all consider your present income, are you able to save money every month or is your income equal to your expenses every month? Do you feel that your income is not enough to meet your expenses? Take all this into consideration and take up a policy because life is not fixed as mishaps can occur any time and you will need money for that.
Age has a crucial role to play
For instance if you are young and your children are also very young then you will surely require extra life insurance to shelter them till they are able to care on their own.
The number of dependents you have
Again the life insurance which you are to take will depend on the number of dependents you have in your family. More the number of dependents, more the insurance you will need.
Rules of thumb: How much life insurance do you need?
The amount of life insurance should be sufficient enough to help the dependents maintain same life style despite your absence. You will find some rules of thumb existing which tell you that the sum assured should be 7-10 times your yearly income. You can also find financial calculators which can calculate how much life insurance you need. But all these do not take consider your situation or your forbearance for risk and insecurity. The best calculation that you can make is to take into consideration all you situations and then calculate the amount of life insurance you need.