Think of life insurance as a safety blanket for your loved ones to replace your lost income should you pass away prematurely. Bronson Insurance Services in Oak Creek, WI can assist you with any questions you may have.
How much life insurance do I need?
When it comes to determining how much life insurance to purchase, there are two methods to follow.
The first, is to simply take your income and replace it by the number of years that you wish to replace it for – usually 10 to 30. Whatever figure you land on is how much life insurance to purchase. While this method is fast, it can be easy to purchase too little life insurance, so you should estimate higher than you think.
The second method, known as DIME, is calculated via the following:
- Debts: Add any outstanding debts, not including your mortgage, which is highlighted below, such as student loans and credit cards. These are debts that your family is likely to be responsible for when you pass away.
- Income: Take your current income and multiply it by the number of years that your family will depend on it.
- Mortgage: Add the information from Debts and Income with the remaining balance on your mortgage.
- Education: If you are paying for your children’s education or someone else’s, add the anticipated cost to the figures above.
Once you’ve arrived at your DIME figure, you’ll find the sweet spot for how much life insurance to buy. Unlike the income rule, the DIME method is far more comprehensive and likely to result in a more accurate number.
For more information on life insurance and help with finding the right policy for your needs, give Bronson Insurance Services in Oak Creek, WI a call.
We’ll schedule a no-obligation consultation to review your options and answer any questions that you have.