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MissouriFamilies.org - Money Matters - Consumer Action

 

Finance Quick Answers

 

 

Do I need a life insurance policy? If so, how much do I get?


The main reason to purchase a life insurance policy is for the death benefit - life insurance is designed to protect survivors of the insured. If your family or other people depend on your income, you need life insurance to help them live without your support if you pass away.
 

No general formula exists to know how much coverage is enough. Examine your current and potential family situation. A rule of thumb is that you need at least three times your annual income and at the most ten times - enough to replace the insured’s paycheck, cover daily living expenses, and pay the insured’s final medical bills and burial costs. In addition, the insurance proceeds should provide income for long-term needs such as retirement, estate taxes, or college costs.
 

Call the Life Insurance Advisers Association at 1-800-521-4578. They will put you in contact with an adviser to determine your insurance needs and they sell no policies.
 

 

Source: Everyone’s Money Book, 2nd ed., Jordan E. Goodman, 1998, p. 502-504.

 

 

 

 

Written by:
Sandra McKinnon, Consumer & Family Economics Specialist, University of Missouri Extension

Cynthia E. Crawford, Ph.D., Consumer & Family Economics Specialist, University of Missouri Extension

 

 

 

 

 

 

 

 

 

 

 

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Last update: Monday, July 28, 2008

 

 

 


 
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