Reader’s Question:

I’ve heard a lot about how much coverage one should have under a life insurance policy (my neighbors here in Minnesota just loves to talk about these things!), How much universal life insurance, in essence, would you recommend?

Lee

Minneapolis, MN

This is a very good question. Everyone who wishes to have life insurance coverage should know how to recognize how much life insurance would be adequate for their needs. Many experts say you have to get a coverage amount that is ten, twenty, thirty times your annual income as a good rule of thumb. While this may be a good estimates, you can never really be sure if these are enough or in the other hand, this may be too much and you might end up wasting too much money on life insurance that could have been put to good use elsewhere. Where do you even begin?

It would be highly advisable that you get a good understanding of your family, your household, your kids (anyone who relies on you there in Minnesota, financially) needs. On an annual basis, try to determine how much you spend on bills, groceries, mortgage, loans, debts and any other financial obligations that you may have. You will now have a way of more precisely identifying how much money your beneficiaries would need in order to survive decently in the event that you pass away.

Let’s say you do pass away, how much money or income do you want to leave your beneficiaries? For how long? Also, who will take care of burial costs? Let these questions guide you in determining the right kind of life insurance policy for you with the right amount of coverage.