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How much term life insurance do I need?

Maria Ferrante-Schepis
Financial Health
For a quick estimate of how much term life insurance you need, simply take your yearly salary before taxes and add a zero. So if you earn $50,000, it equals $500,000 of term life insurance.
 
If you are a full-time homemaker you will also need to be insured. Although you don’t earn a salary per se, your surviving spouse or partner will need to cover the costs of childcare and other expenses, like home care. To do a quick calculation, let’s say that the average cost of daycare per year, per child is about $15,000. A reasonable cost range for cooking and cleaning per year is about $10,000. So if you have one child, figure on the need for $25,000 per year to replace your efforts as a homemaker. If you add a zero to $25,000, the amount of life insurance would be $250,000.
 
Either of these two scenarios would give you roughly 10 years’ worth of your financial contribution to those you leave behind. If you want to have your income or homemaker costs covered for more than 10 years, just multiply your yearly salary or the yearly homemaker costs by the number of years that is appropriate. For example, if you earn $50,000 and want to cover your family’s expenses for 20 years, multiply $50,000 times 20. You would need $1,000,000 of life insurance. However much you decide is right your family, you can rest easy in the knowledge that your family is taken care of -- and avoid unintentionally leaving them with financial stress on top of emotional stress.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.