Though some consumers may understand the importance of purchasing a term life insurance policy, they may not know exactly how much in insurance to buy.
A term life insurance policy can step in to provide income for families after a breadwinner passes away. Those funds can be used to pay off any standard debts, including mortgages, car and student loans, or utility bills. Depending on a person's expenses, they may need more life insurance coverage than they think. The LIFE Foundation recommends the purchase of a term life insurance policy with a death benefit that's worth 10 times the insured's annual income.
Policyholders are advised to calculate how much in annual income their family would need if they were to pass away today. Generally, that sum falls between 65 and 75 percent of their current income, said the LIFE Foundation. For instance, a person earning $100,000 annually should have a death benefit worth $1 million, though some experts even say more is required in today's low interest rate environment, which affects savings.
Shopping for quotes on term life insurance can help consumers find the most affordable coverage with the most significant benefits, and consulting a financial planner can help them hone in on the amount of coverage they should purchase.