How much life insurance do you need?
While it’s important to know how much coverage you may need in case something happens to you, crunching the numbers to figure that out can be challenging.
We’ll try to make that process a little easier. With a couple of estimates using the D.I.M.E. acronym, you can quickly calculate how much life insurance from Horace Mann Life Insurance Company you may need to protect your family.
How much money will your partner need to take care of your debts and provide for your family? This could include credit cards, auto loans, student loans, etc. You should also consider any funeral costs or medical bills.
For example: If you have $15,000 in credit card debt, $35,000 in student loan debt, $7,500 in auto loan debt and you’re going to budget $10,000 for your funeral cost, your debt total is $67,500.
Your life insurance coverage should help your family maintain the same standard of living as they had when you were living. Your coverage amount should be based on your household’s annual income (from all sources) and multiplied by the number of years your family will need to be supported.
For example: If your household’s annual income is $75,000, and your family will need to maintain the same financial security for the next 10 years, your estimated coverage amount is $750,000.
How much of your mortgage is still outstanding? Or if you’re renting, what are your rental costs multiplied by the number of years your family would continue renting? These totals will give you the amount of money needed to securely keep your family in their home.
How much will it cost to put your children through school? Take the number of children multiplied by the number of years they will be enrolled. It’s common to estimate a child’s education will cost around $100,000 each. If you do not have children, you may treat this as an emergency fund for miscellaneous and unplanned expenses.
Everyone’s life insurance needs are unique, but this exercise can help you get a solid estimate to help provide for your family’s financial needs in the event of your death. Life insurance coverage is probably more affordable than you may think. If you would like more information about life insurance, contact your Horace Mann representative.
Horace Mann Life Insurance Company underwrites Horace Mann life insurance products.