How Much Life Insurance is Enough?

Shambling Situ Gintung Dam, Tanggerang Indonesia
By Darrel Richter, Contributing Reporter

When deciding how much life insurance coverage you need, you're giving yourself the opportunity to protect yourself and you beneficiaries for years to come. But if you don't correctly calculate how much money will be needed, you might be defeating the purpose of life insurance.


You can group the financial responsibilities you have at


the time of your death into three categories: final costs, income loss, and debts.

The price of funerals and the expenses that go along with them has been on the rise over the past 20 years. And even if you decide not to have a funeral at the time of your death, you still need to consider the costs of disposing of your body. It's a good idea to get a solid estimate of how much your funeral or disposition costs will be. Be sure to write your funeral intentions in a will, so your beneficiaries will know how much of your life insurance money is planned for the funeral.

Also included in the final costs of your death are federal and state death taxes and property taxes. These taxes need to be paid immediately after your death. To calculate these expenses, you first should calculate the total value of your estate. These final taxes for someone with a moderately-valued estate typically amount to about 10 percent. If you have a larger amount of property, it will be a bit more than 10 percent of the estate. If you aren't sure where you fall, you will want to ask your attorney for an estimate.

Second, look at how much income your family or beneficiary will be without when you die. This is perhaps the most overlooked cost when considering your financial responsibilities at the time of your death. When determining this amount, the most important step is communicating with your partner. Talk about whether your spouse would be gainfully employed if you should die, whether your spouse would remarry, and how your car or house payments will be taken care of. If your partner will be employed, your financial responsibilities to them will be lower. If your spouse will remarry to another person with a substantial income within a short period of time, you won't need as much money for them. And if you decide to pay off your car loan or mortgage at the time of your death, your partner won't need as much income, either. You should consider each of these issues first when determining the income loss of your family.

Determine how much money per year after your death your family will need. Then determine for how many years that amount of money will be needed. Multiply these two figures, factor in an appropriate interest rate for inflation, and you've arrived at the amount of income your beneficiary will have lost after your death.

The third consideration is the amount of debt that you will have at the time of your death. When you die, your family will become responsible for paying those obligations. This category is simple to calculate once you've determined what should be included. Tally up all your credit card accounts, short-term loans, and installment payment obligations. These are payments that you likely don't want to be passed on to your family.

You may decide that other loans, like car notes and mortgage payments, should fall under this category instead of considering it a long-term income need. Including it as a debt that you want paid off at the time of your death may increase the amount of coverage you need substantially, but your family wouldn't inherit those monthly payments.

The final consideration you should entertain is how much money would be needed right now, if you should die tomorrow. Keep in mind that these costs may be above and beyond what you've already calculated. Have you already paid for your children's college education? Are there other immediate costs your family will have that you may not have in 10 or 20 years?

Also, keep in mind that your present salary at work may increase or decrease. If you believe you're at your peak income level right now and that in 10 years you won't be earning as much money, you need to consider that the income your family would lose should you die tomorrow will be a greater amount than it may be in 10 or 20 years.

Once you calculate how much life insurance money you will need to protect you and your beneficiaries, you may contact your agent to help determine what amount of coverage is right for you. It's best to be prepared for this step, rather than guessing and leaving your family responsible for debts and an income loss.

Auto Insurance Coverage

When you buy your first car, you might not know what risks you are exposing yourself to. There are many dangers which can have an effect on your car or even on your health. No matter how good a driver you are, you will also be subject to accidents, even if they don’t happen from your fault. Basically, you don’t need to protect yourself from your mistakes, but from other people who might not drive as well as you do. In fact, the law actually forces everyone into getting insurance policies, for their own good.

Cheap Insurance

The cheapest auto insurance coverage policy is the one implemented by the law. However, this doesn’t mean that you will have to get that one. Each state will decide a certain limit for policies, but not because that is what you need for being protected. There are a lot of persons who own cars, but some of them don’t have money. When they try to get insurance policies, they will certainly need to struggle financially for it. This is why the lowest insurance coverage is that low – so that everyone can afford at least some type of protection. Many people go out and buy the minimum just because they think that this is the best, but this is definitely wrong.

If you can afford buying a more expensive insurance policy, you should go for it. When getting the right auto insurance, you have to look at the car insurance coverage types.

Types of Coverage

There are a few types of policies out there and each one will act differently. If you want to be protected, you will have to study your options and pick the best one. This is quite important because if you get into an accident which isn’t covered by your insurance company, you will have to pay for the damages. If you don’t have the money, the person which needs to get their car repaired will have the right to sue you and the judge might repossess your car, belongings and even your home. In some cases, you might cause serious bodily injuries which have to be treated with expensive medical procedures. This is exactly why you should always try getting the best auto insurance coverage you can.

1. Bodily injuries

This type of insurance will be help if you cause an accident and the other person or persons involved get injured. Depending on your policy, your insurance companies will take care of their problems.

2. Property damage

Because accidents usually happen between a vehicle and some other type of property, you certainly need property damage coverage. With this insurance, you will be able to avoid paying for repairs if you cause an accident which results in property damage.

3. Uninsured and underinsured motorist coverage

If you are on the road and you have the right insurance policy, you can’t be sure that everyone else is in the same situation. Chances are that someone around you doesn’t have insurance at all, driving illegally. If he happens to hit you, you have all right to get your car fixed by his insurance – but he doesn’t have any policy. Because he might as well have no properties and because court cases will last for months, you should get uninsured and underinsured motorist coverage. This way, your car insurance policy will take care of your car and the passengers in it.

4. Injuries to others

This is the type of insurance you need to get additionally for making sure that each member of your vehicle is protected from injuries. In some cases, you might get into an accident and your policy will only take care of the people from the other car, but you certainly need to make sure that the person’s in your car are protected as well.

5. Damage of your vehicle

In this case, you have to options to choose from: collision and comprehensive. Collision auto insurance coverage will be helpful only if you get into an accident which involves another car. This is the most common type of accident, but you shouldn’t forget the alternative.

There are many accidents caused by trees which might fall on your car, hailstorms, floods or even tornadoes. You can even lose your car in an earthquake or it might get stolen. All of these events are not usually covered by your insurance policy, but you can get them under your comprehensive insurance. This way, you can be sure that you have full protection against any situation.

Where To Find Auto Insurance Policies?

Nowadays, you don’t have to search for auto insurance polices all over the city and try to compare the offers. This process used to be the only option available, but now anyone can get the right auto insurance policy by looking for it on the internet. Better yet, you can get the best one automatically.

You can now search for auto insurance coverage on policy comparison websites. This way, you just have to pick the coverage that you would want to get from your insurance policy, fill in your location and see how much such a policy would cost. You can get offers from many companies and see which one is the cheapest and all of these will be completely free. Finding cheap auto insurance policies has never been so easy and you can now do it too with a basic internet connection.

The only part of the process which will have to be done by you is to decide which coverage suits you best. Experts always recommend high coverage insurance policies and this is exactly why you should always try getting them. If you have a certain amount of money which you are willing to spend on auto insurance, you should just try to see which type of coverage you can afford and get the best one. This way, you will be able to drive safely without having to worry about protecting your car, family and yourself.