1. How much debt do you have?
Other than your mortgage, think about other debts that you might have. Do you have student loans, car payments, credit card debt? Do you add to that debt each month or do you pay it down? These types of debts mean that you are spending more than you earn. When determining the amount of life insurance coverage you need, you'll want to take into account these debts. Make sure you have enough coverage that they can be paid off if something were to happen to you. You don't want to leave your family struggling to pay off your debts.
2. What are your monthly expenses?
Think about how your money is spent each month. The easiest way to do this would be to create a budget; you can also take a look at your bank statements to see where the money you're earning is going. You can't ensure your family will be taken care of if you don't know how much money you spend each month for basic living expenses. This is something you'll want to give careful thought to, don't just guess an amount.
If you put money away each month into a savings account or investment account, then you're already in good shape. Keep that up and you won't need to purchase as much life insurance as that money will be there to take care of things as well. You can subtract your savings amount from the total amount of life insurance you need and then see what's left to help determine what amount of insurance you should purchase.
4. What future obligations do you have?
If your family is planning to make some larger purchases in the future, you should take those goals into account. Maybe you're going to need a new car in a few years, as your current one is getting up there in miles. Do you have children? If so, do you have a college fund for them? You need to think about these goals and if you have the money for them. If not, you will need to add that amount into the amount of life insurance coverage you choose to purchase.
Some experts say that you should have enough life insurance to cover 5-10 times your annual income. However, the real answer to the question, "How much life insurance coverage do I need?" is that it depends on how much money your family and dependents are going to need after you're gone. You can rest assured that they will be financially taken care of for several years if something were to happen to you. Contact the best insurance agent at Lake of the Ozarks about life insurance today by calling 573-348-2794.
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About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.
Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral