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How much Life Insurance should you buy?

How much 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.
Don Chew
A CFP holder with an engineer's mind with interest in technology, design, innovation and of course, personal finance. Believes design and automation would solve most challenges in our everyday lives. A hobbyist videographer but still far from being even a beginner. Life principles - Joy.