A little while ago I saw a page on the internet that, unfortunately, I can't share because of liabilities that stated that you only need to have life insurance that equals to three times your annual income. This bothers me and no, not because I tell people that folks should have more than that as a general rule, but because person and family are unique and have unique personal and family needs and obligations. It's highly unlikely that a qualified life insurance agent would intentionally lead you to believe this to be true. Why? Read more.

Here's a brief example of why this won't work for most people. Let us say that we have a family of mom, dad and two kids where the children are young, ages five and seven, respectfully. Mom is a housewife and has no real job skills other than working at KFC as a teenager, which was a few years back. The husband is the breadwinner and makes a decent income of around sixty thousand each year and, like most American families, has bills to match that annual income.

They live in a nice family home that they're buying, have two car payments Health Insurance which, even though it's an extra as a job benefit for himself (after deductibles), he still must is required to} pay to cover the family. They also must pay auto insurance for two cars, life insurance for 4 people in different amounts, homeowners insurance, dental coverage and of course all of the other regular expenditures such as food, clothes, utility bills, ect. Also, they have to send money each month to pay for her mother who is in a nursing home.

There are many other variables that could be added into this and I could very easily add more and more monthly obligations, but do you see how these bills added up for this family?

This could be similar to your own circumstances, give or take. In the event of this man's untimely death do you believe that three years worth of his annual income would be an adequate amount of life insurance for his family? Let's do some math.

With the man of the house bringing home an annual income of $60k that times three years would give his family $180.000.00 coverage of life insurance. This may be stretched into four years worth of living money considering that one family member is now gone, but that only brings the children to the ages of 9 & 11, what do they do now?

It's possible that the man might have allowed for this event, even beyond normal life insurance, by also purchasing a "Mortgage Life" policy that would pay off the home in the event of his death. He may have also made allowances in the vehicle contracts. But what if he forgot? Even though he had done this it still would have stretched the families living expenses another 3 or 4 years, depending on how much they cut back on unnecessary things. That would bring the children to the ages of thirteen and fifteen now. What's going to happen the next five years until the younger child turns 18? What about college for each of them? Do the couple's parents have burial insurance? They may not if this couple is already sending money each month for the mother's health needs.

This is all simply an example of a common family situation but I wanted you to realize and really think about these things. The only way for you to determine how much life insurance will be enough for you and your family is to actually sit down and look at every bill that you pay now the bills that you know you'll have in the future, all of the variables that could possibly happen (if these didn't happen there might not be a need for insurance) and then when you think you've got a good solid number, add another 20%, just in case. It's always better to have too much than not enough.

If you are the primary provider of your family wouldn't you want to know for for sure that your family was going to be okay in the event that something happened to you, no matter what the circumstances were? I thought so, me too. The only point that I'm trying to make is to not let someone else dictate to you how much life insurance you need. Sit down with your spouse and then get ahold of a qualified agent. Set it up right the first time because, unfortunately, there isn't a second chance in these life and death circumstances.