You probably know you need life insurance, but determining how much coverage you need can be complicated. At Allen & Associates Insurance Inc. in Albany, OR, we help our clients get the right coverage for their needs.
Basic Formula for Life Insurance Coverage
The basic formula for choosing how much life insurance coverage you need is fairly simple. Simply take your annual income, and multiply it by 10. Some experts recommend multiplying it by 15 instead.
This is the minimum amount of life insurance most individuals should carry, but there are other considerations as well.
When selecting coverage, it’s important to consider the amount of debt you have. If you pass away, your loved ones could be liable for any outstanding debts.
To factor in your debt, add all of your outstanding debts. You’ll then want to add this amount to the previous number. This provides 10 or 15 years’ worth of income and covers any debts you may owe.
Dependents and Income Replacement
Lastly, you’ll want to think about your dependents, and how long you’ll need to replace your income. If you have a very young child, you may want to replace your income for 20 years. If you have a spouse that’s near retirement and no other dependents, you may only need to replace your income for 5 or 10 years.
How Much Coverage Do You Need if You Have No Dependents?
If there’s no one relying on your income, you may think you don’t need life insurance. The truth is, life insurance is still important. However, you’ll need less coverage.
You’ll want a policy that covers any outstanding debts and burial expenses, so you don’t leave a financial burden on loved ones.
Contact Us Today
If you need life insurance in Albany, OR, contact us at Allen & Associates Insurance Inc. We’ll help you select the policy and coverage limits that best suit your individual needs.