There are many ways to answer this question. Some experts say, you need 4 times the current annual income. Some experts would have you go through much analysis before they can answer this question.

     Below is a simple calculation to help you determine by yourself how much you need for life insurance.

First input the followings:

Annual Income Needed		(A)	_______
Other Expenses		(B)	_______
Amount Accumulated Now		(C)	_______
Comfortable Rate of Return per year		(D)	_____%

Using the above data input to calculate the followings:

	Calculation	Denoted by	Value
Annual Income from Existing Assets	(C) x (D)	(E)	_______
Annual Short Fall	(A)+(B)-(E)	(F)	_______
Life Insurance Needed	(F)/(D)	(G)	_______

EXAMPLE

     Mr. Jones is trying to find out how much life insurance he would need on himself so that his family would not be in financial hardships if he dies. First, he figures that he makes about $70,000 but his family only spends $50,000 on daily living expenses.

So, (A) = $50,000.

     Next, he estimated that his family would need $5000 extra for his funeral expenses.

So, (B) = $5,000.

     Right now, the family has about $40,000 in bank deposits, CDs, and other investments.

So, (C) = $40,000.

     Over the years, Mr. Jones has made a return of about 7% on average investing in some stocks and bonds.

So, (C) = 7%

Annual Income Needed		(A)	$50,000
Other Expenses		(B)	$5,000
Amount Accumulated Now		(C)	$40,000
Comfortable Rate of Return per year		(D)	7%

Now the Calculation:

     Each year, your investments return on average 7% of $40,000 or $2,800, including the year of your death.

     Your family needs $50,000 that year and $5,000 extra for your funeral expenses. Therefore, you are ($50,000 + $5,000 -$28,000) $27,000 short.

With a 7% return, you need life insurance of $385,714.

	Calculation	Denoted by	Value
Annual Income from Existing Assets	(C) x (D)	(E)	$2,800
Annual Short Fall	(A)+(B)-(E)	(F)	$27,000
Life Insurance Needed	(F)/(D)	(G)	$385,714