Think about what would happen if you were to die today. Where would your family be? What would happen to your house and your debt? Life insurance pays out at the death of the insured (that's you or your spouse, most likely) in one lump sum. That lump sum is usually expected to provide income for as long as there are expenses to be paid (mortgage, children's education, retirement nest egg, etc). When determining how much you need, think about how long that money can last, how much return the money will have (typical bank accounts are paying much less than 1%), and inflation (over 3% currently).
The money never lasts as long as you think, and no one ever became rich over a life insurance policy. It won't make you rich, but it will make life much easier for those who are "left behind" on this earth. A good rule of thumb is 10x your current income. For instance, if you make $40,000 per year, you should purchase $400,000 of life insurance. The premiums have to be affordable, of course as well, but typically the insurance you need and want can be found for the price of a few trips to your local sit-down restaurant each month... and the benefits are priceless.
The money never lasts as long as you think, and no one ever became rich over a life insurance policy. It won't make you rich, but it will make life much easier for those who are "left behind" on this earth. A good rule of thumb is 10x your current income. For instance, if you make $40,000 per year, you should purchase $400,000 of life insurance. The premiums have to be affordable, of course as well, but typically the insurance you need and want can be found for the price of a few trips to your local sit-down restaurant each month... and the benefits are priceless.
