Determining how much life insurance you need is different for every person. It depends on things like whether you have children, how much you have in savings, and how much your family counts on your income. There's no rule of thumb that works for everyone, because everyone's situation and goals are different. Rather than go off what fit someone else's need, ask yourself these questions:
What income loss do you want to cover, and for how long?
Some people choose to cover the lost income from time of death through to retirement. Others purchase a smaller amount of coverage as a way to buy time and ease the transition. Covering five years worth of income may not be enough to see the kids through school, but it will allow time to make changes, such as training for a new job, finding and paying for daycare if the spouse stayed home, or perhaps to downsize your home.
What debts do you want to pay off?
Some people just think about paying the mortgage off because it's a large expense, but consider focusing first on paying off high interest debt and debt that can't be paid off by selling an asset (like a home). You may consider paying off any credit card debt, student loans, car loans, and then the mortgage.
What goals do you want to help fund?
You may do the math and feel that your partner could provide for your family's necessities, but what about your big picture goals? Would they be able to fully fund their retirement accounts every year? Or help your kid(s) pay for school? Or maybe you don't have anyone relying on you financially, but you want to leave some sort of legacy. You could do this by listing your favorite cause as your beneficiary.
What incidentals do you want to allow for?
Sadly, it's not uncommon to incur incidental expenses if an illness precedes your death. Consider the financial burden on your family of a hospitalization or ongoing medical treatments. If out of town, you'd have travel, food, and lodging expenses on top of medical bills. Not to mention any time taken off work prior to or after your passing.
The good news....
Life insurance isn't really fun to talk about, I get it. But there's good news- it might be a lot more affordable to get a great life insurance policy to protect your loved ones than you think! To learn more about what it might cost and get help determining the right amount of coverage for you, contact your local financial advisor or insurance agent. We're happy to help, and are honored to work with people in our communities to protect their family's future.