How much life insurance do I need?
A fairly good rule of thumb offered by the National Insurance Consumer Organization is
that you need coverage equal to at least seven years of current annual income, assuming
you are married and have two or more children. According to Personal Finance for Dummie$
(IDG Books Worldwide Inc., Foster City, Calif.), "Another way to determine the amount
of life insurance to buy is to think about how much you will need to pay for major debts
or expenditures, such as your mortgage, other loans, and college for your children. If,
for example, you'd like your spouse to have enough of a life insurance death benefit to be
able to pay off half of your mortgage and pay for half of your children's college
education, then simply add half of your mortgage amount to half of their estimated college
costs and buy that amount of life insurance." Of course, you can always ask an
insurance agent, financial planner or other expert to help you determine how much life
insurance coverage is adequate. But since many of them work on commission, be sure that
you're not pushed into buying too much coverage.