How much insurance do you need?

The key is to have a strategy to provide for your family. A needs approach can offer you a solid estimate of your insurance needs.

With the needs approach, estimate your family's expenses and savings needs over time using the acronym LIFE. Add the following together to estimate your life insurance needs:

L - Liabilities (such as your mortgage, car loans, credit cards, etc.)

I - Income needs for your family to replace your future salary and cover ongoing living expenses, savings needs and an emergency fund.

F - Final expenses

E - Education expenses for your child(ren)

LIFE + Legacy

If you have specific legacy goals, such as leaving money to loved ones or a charity, this need should be added to your LIFE estimate for your total insurance need. In addition, the type of policy you use for your legacy goals may be different than for your LIFE needs.

Your financial advisor can help you refine these estimates. Then you can work together to adjust this amount based on other resources that may be available for your family should you pass away, including savings and investments, any existing insurance coverage (such as through your employer), pensions, potential government benefits and others. This will help you determine how much insurance may be appropriate for your situation.