But if you purchased life insurance years ago — perhaps before you had a house and children — you may need to bump up your coverage. Your employer may offer a plan, but it may not be enough to cover all your needs.
Everyone’s needs are different, so here are a few questions to consider that should help put you on the right track.
How old are your kids?
If you’ve got toddlers, your life insurance needs look very different from someone with older teenagers. If you die and leave your spouse with a 1-year-old and 3-year-old, he or she has nearly two decades to get through without your income — not to mention college costs. The younger your children, the more coverage you’ll want.
Has your income changed?
When you bought life insurance originally, you may have been 10 years younger and making less money. Now that you’re older and further up the career ladder, you’re probably earning more, so the general rule of thumb — that you buy 10 to 12 times your income in life insurance — may work out to be a higher number now.
If you’re a stay-at-home parent, you may not earn a paycheck, but if your children are small, it would cost money to cover the care you provide. Even when your children are in school, you’d likely need afterschool care or babysitters, so this would be an ongoing expense until your children are older and self-sufficient. Think about what that would cost per year and how many years you might need it.