Q: How much Life Insurance do I need?
A:Some recommend 8-10 times the amount of yearly income required to replace the income of the insured. In a situation where the financial hardship would last for the life of the beneficiary, a death benefit amount should be selected if invested at a conservative rate of interest would yield a yearly return. For example, a $500,000.00 death benefit invested at 10% would yield $50,000.00 per year.
Deciding on the correct amount of coverage for that situation would require you deciding how many years after your death your lost contribution would need to continue.
The higher the amount of the death benefit, the higher the premium you will pay.