How much Life Insurance should you buy?

How much life insurance should you buy?
How much life insurance should you buy?

When purchasing of insurance, there are many which are uncertain on how much coverage they need to buy. Two major variables one need to consider are the following:

  • How much future income is needed to sustain the household?
  • How much expenses are needed upon death?

How much future income is needed to sustain the household?

This amount takes into account the expenses of your immediate family members. Some of the examples include:

  • Current and Future Expenses
    • Daily necessities – Food, Accommodation, Transport
    • Property Installments
  • Investments which could generate positive cash flows
    • Businesses
    • Investments

How much expenses are needed upon death?

This amount takes into account of your final expenses such as:

  • Medical expenses
  • Funeral bills
  • Estate management costs
  • Mortgage
  • Other personal debts and etc.
Yoong Chih Foo
A CFP holder which actively involves in Financial Planning and Insurance Advisory since year 2008. Constantly pursues value-based financial planning to provide adequate financial roadmap for anyone seeking guidance. Believes in 3 things for work and even play: Simple, Unique and Value.