How Much Life Insurance Do I Need?
"How much life insurance do I need" is a big question that we receive from clients all the time.
This is an important question, and the answer really depends on your situation, your family, your income, your goals.
How much life insurance do I need
Here's a simple rule of thumb that can get you a ballpark number.
For Life Insurance you want to pay off your debts and make sure there is enough money to take care of your family if you're not there.
To do this – first add up all your debts – mortgage, credit cards, loans etc.
This is your base amount to cover so you don't leave liabilities behind for someone else to clean up.
Second, you want enough to take care of your spouse and kids if you are gone.
Usually this means replacing your income so your family can stay in the house and keep living their current lifestyle.
A lot of our clients also want to make sure the kids' school is paid for.
How to Calculate how Much you Need
The quick calculation is to cover your debts plus 10 or 20 times your annual income
10 times income makes sure your family has your income for the next 10 years.
20 times the income invested at a 5% return will replace your income forever.
You make $100,000 times 20 it’s $2 million. Invested at 5% pays your family $100,000 every year forever.
There's no right or wrong answer to the question “how much life insurance do I need?” but this should give you a general idea of how we calculate it.
If you want to set up life insurance for your family or in your business, use the contact form below to book a meeting with us and we will get back to you in 24 hours on a business day.
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
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