Financial Reflections responds:  While I get the facts as best I can, what appears on this website is only my opinion.  It does not constitute financial advice.  Indiviual situations can vary, and I have no problem with someone seeking out competent professional financial advice.

Most people get suckered into purchasing too much life insurance or they don’t pruchase enough. How you should (and almost all financial planners do) calcluate the life insurance needs amount is to determine what income you want to replace.

Say for example, you are married and your husband is the sole bread winner (I know it is gender biased, but I am just trying to provide an easy example). Your husband earns $100,000 per year. 10% of that will go to fund retirment. You are both in your mid-50’s. You don’t work. You expect your husband to retire at age 65. The question is how much life insurnace do you need?

For most folks the answer is $90,000 x 10 (which is the number of years that the husband is to continue to work, less taxes). This is oversimplified, but the answer is that “you need enough life insurance to cover any unexpected loss in income.”

Financial Reflections responds:  Thanks for the information!

Sometimes term insurnace does the trick, other times whole life does the trick. In nany cases, this is a choice between varialbe universal life (a form of whole life) and term life. This depends on age, health, and income (and projected income).

Financial Reflections responds:  Under what circumstances do you recommend universal?  I’ve largely heard bad things about it, and not just from Dave Ramsey.  It’s often billed as a high commission product for those who sell it.

If you are going to talk about what life insurance amount is needed, you should cover these very basic concepts. Otherwise you are misleading your readers. You are hurting them.

Financial Reflections responds:  My readers are big kids and can make their own decisions.  I’m learning this stuff as I go and writing what I learn.  As I clearly point out in my disclaimer, “the information and opinions on this website are not a substitute for the advice of a qualified professional.”  I’ll assume you are qualified, instead of someone pusing high-commision life insurance who’s posting comment spam.  just to be sure, I removed the two links you dropped at the bottom of your post.

Gary

Overall, very good tips.