How much life insurance do you really need is a very difficult question to answer. My feeling has always been that the best answer comes from your gut. That isn’t typical for a life insurance agent to say. Most agents might pull out a worksheet for you to fill out or point you to a life insurance calculator when you ask them how much you need.
Testing Out Life Insurance Calculators
So I decided that I would experiment with 3 different life insurance calculators and see what kind of results I got. For purposes of this experiment I used a 40 year old man earning $75,000 per year, married to his wife who also earns $75,000 per year and they have 2 children, a 5 year old and a 3 year old. They also have $25,000 in savings, and a $250,000 mortgage balance.
Life Foundation Calculator
I googled “life insurance calculators’ and used the top 3 results for my experiment. The first result that came up was the Life Foundation’s Calculator. Based on the questions I was asked, the Life Foundation Calculator Estimated I need exactly $800,567 of life insurance.
Next, I moved on to the 2nd google result which is Bankrate’s Calculator. Based on my inputs, Bankrate estimated that I
needed $900,716 in life insurance.
Batting next, was MetLife’s Calculator. According to MetLife, I needed $1,000,000 of life insurance, and they also recommended a minimum amount of life insurance I should get which was $650,000.
Each calculator was a bit different. Bankrate asked me to estimate the cost of future college expenses for my kids, while Life Foundation and MetLife asked if I expect my kids to go to public or private colleges.
Get Your Crystal Ball
The truth is that in this example the kids are 3 and 5 years old. Who knows what they will end up doing in life. Maybe they will go to Harvard, maybe community college, or maybe they will start a business after high school. Who really knows?
What’s Really Important
The bottom line is that life insurance calculators can be useful, but at the end of the day, the question of how much life insurance you need really doesn’t have an answer. No one knows if you will die tomorrow or live another 50 years, or if you will get divorced, or lose your job, or hit the lottery.
More important than debating how much life insurance you really need, is that you actually buy a life insurance policy. Many Americans don’t have life insurance, or have little life insurance through their job. Stop thinking about how much you need, or playing with calculators online. Go with your gut and just get a policy. And to make it easy for you, below this you will find a life insurance quote form and we can help you get the best rates on life insurance.