How Much Life Insurance Do I Need?

Life insurance is one of the most important tools in modern financial planning, but it is not always the most appreciated. It has a role to play in virtually all phases of the typical family’s economic life cycle.


The purchase of life insurance is an important decision for you and your family. Your marital status, number of dependents and cost for their support, future education needs, current and anticipated family income, and your current assets and debt obligations all play a role in determining the amount of life insurance that is right for you.


Choosing the Amount of Life Insurance


Your need for life insurance will vary with your age and responsibilities. The amount of life insurance you need depends on the standard of living you wish your dependents to have after your death. Start by calculating the capital assets and sources of income that would be available to your dependents after your death. Is it enough? You should choose an amount of life insurance that is necessary to meet any shortfall. Of course, this is subject to what you can afford to budget for premium payments.


Reasons for Purchasing Life Insurance


There are many reasons for purchasing life insurance, including the following:


  • Insurance to provide financial protection and security for surviving family members upon the death of the insured person.

  • Insurance to cover a specific need such as paying off a mortgage or other debt upon the insured's death.

  • Business life insurance to compensate a company in the event of the death of a key employee.

  • Business life insurance to provide a surviving partner or shareholder the cash to buy out a deceased partner's share of the business.

  • Life insurance to provide liquidity to pay estate taxes and other final expenses.


Attorney Adler focuses his practice on estate planning, wills, trusts and estates. He can be reached at 212-843-4059 or 646-946-8327.

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