Life insurance isn’t mandatory, but it is a really good idea if you aren’t rich, you have a family, and if you have debt! Cheap life-insurance is available so life insurance can be affordable for families with low income. Most people like to think of insurance as a kind of investment. Compared to the kind of returns you get with your real investment options though, you will lose money with life insurance.

The typical type of cheap life-insurance that can be termed an investment, is a cash value policy. Buy this kind of policy, and the insurance company invests your premiums and pays you interest on them. But that still isn’t anything near what you would get from something like a mutual fund.

So how much life insurance you should buy then. You’ll get a meaningful answer to this question the moment you break it down in two parts – how much money does your family need, and how much debt do you have.

You want you family to have no financial worries when you are gone. So if you have a $5000 loan remaining on your car, $100,000 on your mortgage and so on, you needed total of at least $105,000 for all these. And then, you need to think of a way to replace lost income for your family. You want to supply your current income and a little bit more for unforeseen circumstances. If you’ve been making $50,000 a year, at a conservative rate of investment return, you’ll need about $400,000 in your investment account to make $50,000 a year, that is what you need to be insured for. Total both together, and you’ll find that you need to be insured for about half a million. You could also add other things to the sum – how much your children will need for college, and so on.

Calculating how much life insurance to buy is a purely subjective decision. However, these tips should have helped you come across a basic figure you can start with when looking for your cheap life-insurance policy.

Life insurance isn’t mandatory, but it is a really good idea if you aren’t rich, you have a family, and if you have debt! Cheap life-insurance is available so life insurance can be affordable for families with low income. Most people like to think of insurance as a kind of investment. Compared to the kind of returns you get with your real investment options though, you will lose money with life insurance.

The typical type of cheap life-insurance that can be termed an investment, is a cash value policy. Buy this kind of policy, and the insurance company invests your premiums and pays you interest on them. But that still isn’t anything near what you would get from something like a mutual fund.

So how much life insurance you should buy then. You’ll get a meaningful answer to this question the moment you break it down in two parts – how much money does your family need, and how much debt do you have.

You want you family to have no financial worries when you are gone. So if you have a $5000 loan remaining on your car, $100,000 on your mortgage and so on, you needed total of at least $105,000 for all these. And then, you need to think of a way to replace lost income for your family. You want to supply your current income and a little bit more for unforeseen circumstances. If you’ve been making $50,000 a year, at a conservative rate of investment return, you’ll need about $400,000 in your investment account to make $50,000 a year, that is what you need to be insured for. Total both together, and you’ll find that you need to be insured for about half a million. You could also add other things to the sum – how much your children will need for college, and so on.

Calculating how much life insurance to buy is a purely subjective decision. However, these tips should have helped you come across a basic figure you can start with when looking for your cheap life-insurance policy.