1. Human Life Value*
Based on the prize of your future earnings, a elementary way to estimate this is to get 30X your income between the ages of 18 and 40 ; 20X income for old age 41-50 ; 15X income for age 51-60 ; and 10X income for senesce 61-65. After age 65, coverage is based on web worth alternatively of income. See below for a more detailed explanation of the philosophy behind this method acting and other factors that may be considered in the calculation .
2. Multiply your income by 10 – and add college for each child
This approach is a moment simple but still helps design for opportunities like college tuition for your children. How much should you add for each child ? College international relations and security network ’ thymine cheap : you should account for somewhere between $ 100,000 and $ 150,000 per child. If you split the difference – and have two kids – that ’ s an extra $ 250,000 .
3. Use the DIME formula
This method acting considers future expenses in addition to future earnings. DIME stands for Debt, Income, Mortgage, and Education – four significant factors to consider when making a detail estimate of your life insurance needs :
Debt: Total all your debts other than your mortgage. car payments, credit cards, scholar loans – even personal obligations such as money you may have borrowed from a sibling to put a down payment on your house. On top of all that, add about $ 7,000 for final examination expenses .
Income: How much do you make a year ? And how many years will your family need that money ? It ’ s a catchy question to answer, but a good place to start is determining how many years until your youngest child graduates high school. For exercise, if you make $ 50,000 and have nine years until your youngest graduates high gear school, put down $ 450,000 for income.
Mortgage payments: Look at your last instruction and get the payoff sum. If you have a second mortgage or HELOC ( Home Equity Line of Credit ) add that ( if you haven ’ deoxythymidine monophosphate already included it in the debt section above ) .
Education: Anticipated college costs for each of your children. As we said before, figure between $ 100,000 and $ 150,000 per child .
Add those four factors all up and that ’ s your total. You can besides adjust ( i.e., subtract ) for any current savings and life insurance you already carry .