Protecting your family is important, but you also need to avoid spending extra money on insurance that is needed for other purposes. The key is to find the right balance. The amount needed depends on your situation and usually fluctuates throughout the life cycle.

If you have dependent children, life insurance is most likely a necessity. If you are single with no dependents and have other assets to cover funeral expenses and outstanding liabilities you may need little or no coverage. Divorced couples may want to consider carrying a policy on the ex-spouse if he or she depends on that person for child support.

Consider the following questions when estimating your life insurance needs:

• How much will my family need to meet immediate needs such as funeral expenses and outstanding debts such as a mortgage?
• How much will my family need to sustain their standard of living?
• How much is needed for long-term expenses such as college for children?
• What financial resources such as investment assets, Social Security survivor benefits, and other life insurance policies would be available to meet these expenses?

The American Institute of CPA’s has a Life Insurance Calculator at http://www.360financialliteracy.org/Calculators/Life-Insurance-Calculator

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