There are many benefits you accrue when you purchase life insurance from the Jason Ridley Agency of Colleyville, TX. The most obvious one is cushioning your dependents financially even when you pass on. While life insurance offers numerous benefits, do you know how much you need? How do you ensure that you have adequate life insurance to cover your financial interests? If you are about to invest in life insurance, the first step is to figure out how much you need.
Understand your financial landscape
How does your financial picture look like? The first thing to see how much life insurance you need is to understand the big picture of your financial landscape. This way, you can establish how life insurance fits in the plan. Unsure of where to start? A knowledgeable insurance agent can help you spot gaps and strengths of your financial plan and help you figure out how life insurance can plug in your plan.
Calculating how much life insurance you need
Establishing the amount of life insurance you need doesn’t require you to be a mathematics guru. A few simple formulas can help you achieve your goal. These include:
10 times income rule
While it’s not the best rule, it can give you a rough idea of how much life insurance you need. On the flip side, this rule doesn’t consider your family needs, current savings, and the number of life insurance policies you have.
The DIME formula
This method enables you to take a deeper dive into your finances. This rule postulates that you should consider your debts, income, mortgage, and education when determining your life insurance needs.
In addition, if you would want to know how much life insurance you need, you can use life insurance calculators. Better yet, you can sit down with an agent like Jason Ridley Agency to help you determine the life insurance needs. If you need help, please contact us today or visit our Colleyville, TX offices to have a sit-down with one of our agents.