How much life insurance do I need?

There are software programs that go into great details for this, but for simple short figuring this works for many people. 

First,  add up all debts you have that you would want paid off if you passed away.  Allow for funeral expense. This can run $5,000 to $20,000.  Do you need to allow for college cost?  If so get those amounts and add them in.

Now if those are paid, does my love one need an income? If so, this is the hardest to figure, but still workable.  If for a short period of time, say 10 years or less, then just total up what that would be per year and add it in. If your concern is for say 30 years, then you need to consider the rate of return they can reasonable expect to earn thus getting you to an amount needed to earn that.

Now think carefully, is there something extra you need to consider, such as I would like to leave money to a Charity, or you have a child that will always need an income due to health issues?


Riders on life insurance are designed to add extra coverage to the base policy. These vary from company to company, and sometimes even product to product with the same company.

  • Children or Spouse:    This places term insurance on them.
  • Accidental Coverage: These pay an extra amount if death is due to an accident.
  • Waiver of Premium:    This pays the policy premium or a “designated premium amount” if the primary insured is disabled per the policy definition.
  • Guaranteed Purchase Option:  Normally only on a young person policy but guarantees the right to buy additional insurance at certain times   regardless of health or any other issue.
  • Terminal Illness: Allows you to access to part of the face amount due to meeting the requirements of having a terminal illness per the policy. Often there is a cost for this only if used. Many policies include it for free.

There are some other riders you may find, but those often are a special packing by a company for a special market.

Exclusion Waivers:     These take away coverage the base policy has normally, due to hobbies or health conditions. These should be understood very carefully.


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