How Much
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| How Much Insurance Amount in the United States
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| How Much?
The correct amount of life insurance varies not only from one person to another, but also from one period in a given person's life to another. Insurance companies publicize a range of estimates for the proper size of a death benefit, ranging from 5 to 10 times annual salary, but it is almost always more appropriate to carefully calculate your individual needs, boost your estimate to account for uncertainty and purchase the right amount of insurance for your situation.
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| Consider is how much money you need to leave for your dependents. Obviously, this will be affected primarily by the cost of living for those dependents. They will need to pay your medical and funeral expenses, settle debts, acquire new benefits if your employer provided them, and maintain their current lifestyle. Remember also that some of these expenses are ongoing, and a subset of those will change in magnitude over time, complicating the calculation.
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| However, a difficult calculation now is undoubtedly preferable to being underinsured or paying for coverage that you and your dependents do not need. If you are a primary caregiver for dependents, child-care expenses may arise following your death. If you have no dependents and no one relies on your income other than you, you probably do not need life insurance yet. Setting aside a small savings for funeral and estate expenses should suffice.
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| The size of the benefit required by your dependents can be reduced by your other savings. Also, Social Security money is paid to your dependents if you been employed for a sufficient period of time. If your spouse is also a wage earner, you may be able to be more conservative with your insurance estimate due to the costs than can be deflected by that continued source of income. A separate analysis of life insurance coverage should be performed for you and your spouse, however, because each of your deaths would probably affect the family finances differently. Also, if your spouse is not currently employed but is employable, a conservative estimate of the money that he or she could earn by returning to the workforce may be an appropriate consideration for lowering your own death benefit.
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