Calculating Your Life Insurance Needs

While life insurance can serve a variety of purposes, one of the most common is to maintain your family’s standard of living in case you die. Many rules of thumb exist, such as five to seven times your annual income, but don’t rely on rules of thumb to determine your coverage. They don’t take into account your individual circumstances. Your insurance needs will probably change over time. To determine how much insurance you need, consider these questions:

What lifestyle do you want to provide for your spouse and dependents after your death? Review your needs in detail, taking a look at things like:

How much will that lifestyle cost? Come up with an estimate of how much this lifestyle will cost. Include all of your current expenses that would remain the same, as well as any new expenses you have identified. Remember to factor in hidden costs, such as providing for health insurance that was paid for by your
employer. For large debts, such as a mortgage, determine whether it makes sense to pay the loan off in full or to continue making monthly payments.

How much life insurance do you need? First, consider what other income sources your spouse and/or dependents will have. This could include your spouse’s earnings, retirement plans, Social Security, savings, and investments. Life insurance proceeds will be needed to provide the difference.

Your life insurance needs will change over time, so you should periodically go through this analysis.

If you would like more information or to discuss your life insurance needs

Representatives are registered through, and securities are sold through Nationwide Planning Associates, Inc., Member FINRA/SIPC, located at 115 West Century Road, Suite 360, Paramus, NJ 07652. Investment advisory services are offered through NPA Asset Management, LLC. Insurance sold through licensed NPA Insurance Agency, Inc. agents. Frank is registered in NJ, NY, PA, FL, CT, CO, NC, OH and RI. He is also licensed for life and health insurance in NJ, NY, FL, OH and RI. The presence of this web site on the Internet shall in no direct or indirect way be construed or interpreted as a solicitation to sell advisory services to residents of any state other than those listed above and shall not be deemed to be a solicitation of advisory clients living in any state other than those listed above. Nationwide Planning Associates, Inc. and Frankly Financial are non-affiliated entities.
Copyright © 2020. Some articles in this newsletter were prepared by Integrated Concepts, a separate, non-affiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete analysis of these subjects. Professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.