How much Life Insurance?

üHow do you determine your Life Insurance needs?

From the old LDS Handbook for Families it states: 

•Insure the family’s breadwinner first, then others, if desired, as income permits. At a minimum, get enough life insurance to pay for such things as a funeral, taxes, mortgage on the home, car payments, and other debts. The next priority should be to get enough insurance that, supplemented by any government retirement benefits the surviving spouse may be entitled to, there will be sufficient to provide for the family and to make provisions for the children’s education and missions. “Handbook for Families:  Preparing for Emergencies,” Ensign, Dec. 1990, 59.

üThere are two different methods of determining how much life insurance. 

•The earnings multiple approach

•The goal is earnings replacement

•It seeks to replace the annual salary stream of a bread winner for X years, normally 5 – 15 times gross salary is recommended.

•The lower general interest rates, the higher the multiple needed