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  • Eric Rosenberg signed up for a $1 million life insurance policy shortly before starting a family.
  • Life insurance policies should be picked based on your family’s projected expenses for housing, utilities, food, and other needs. Some households may want more insurance to cover major future costs like a college education or a mortgage payoff.
  • To figure out how much coverage he needed, he multiplied an inflated estimate of his annual expenses by 10, then added more for college costs for his future kids — and erred on the side of too much coverage rather than too little.
  • Now, he says, he would have preferred to get $2 million worth of coverage instead. But since he’s older now, adding to his existing policy would be more expensive than if he had done it up front.
  • Policygenius can help you compare life insurance coverage to find the right policy for you, at the best price »

When it comes to life insurance, signing up sooner rather than later is usually a good idea.

The cost of life insurance typically only goes up as you get older, so I wanted to lock in the best possible rate in my 20s. While I didn’t have my family yet, I planned to have kids in the next few years and wanted to make sure they would be covered in case of a sudden loss of my income.

Getting life insurance was a relatively quick, easy, and painless process. The hardest part was deciding how much coverage I wanted. Based on back-of-the-napkin math, you can quickly figure out exactly how much coverage to choose for your family.

Here’s how I did it and a blueprint to pick your own life insurance coverage amount.

Projected expenses and life insurance

Term life insurance is a product designed to make up for lost income if you lose a member of your family or cover new costs that would arise. While few people like to think about the worst case scenario of passing away or losing a spouse, it is a possibility that should be planned for just in case.

If you are the primary income earner for your family, what would their situation look like if your paychecks suddenly stopped? Would they be able to keep their home? Could they still put food on the table? And consider what would happen if a non-income-earning spouse passed away. Perhaps daycare or other expenses would jump significantly. This is what life insurance helps you manage.

For a baseline, look at your typical annual expenses and multiply by 10. So if your household monthly expenses are $50,000 per year, you should look for a policy of at least $500,000. But consider that a minimum, not a maximum. Inflation and income increases will likely lead to higher annual expenses in the future. You don’t want to find yourself with less coverage than your family needs.

Factoring in one-time lump costs

My annual expenses were far less than $100,000 when I signed up for my policy, and still are. That means I picked a policy with a higher value than 10 times my annual expenses (or income). The difference between my annual expenses at the time and $100,000 was more than a rounding error.

I planned that my expenses would go up (they have), but I also wanted to add an extra cushion to make sure my family could easily manage funeral expenses and other future costs. I didn’t know how many kids I would have at that point, but I knew I wanted to help with college or a potential mortgage payoff.

If you are serious about sending your kids or future kids to college, consider typical annual college costs, the rate they have been rising, and add a reasonable projection on top of the 10 times expenses from above.

Policygenius can help you compare life insurance policies to find the right coverage, and the right rate, for you »

Get more insurance coverage when in doubt

Knowing what I do today about the cost of college and a mortgage payoff, I would probably have doubled the $1 million policy I chose. That’s right: If I could do it again, I would pick $2 million in coverage instead.

If I signed up for a new $1 million term policy today for a combined $2 million, I would likely have to pay quite a bit more per month for the second million. I’m older and my dad was since diagnosed with cancer, among other risk factors.

If you are getting new life insurance and on the fence about how much to get, always round up. Term life is very inexpensive compared to the coverage you get. Buying a quality policy for your family is a vital piece of a family’s financial plan.

Don’t wait to get life insurance

If anyone relies on you for your income, life insurance isn’t optional. While parents may play superhero with their kids from time to time, none of us are invincible. I took my expenses, multiplied by 10, rounded up, and added a little more to choose my $1 million policy. That blueprint may also work for you, but don’t feel limited from adding more.

The cost of life insurance is almost certain to go up for you in the future, so planning ahead and getting the coverage you want now is the smartest way to go. Don’t kick yourself for not signing up for coverage when you were younger. Get it today and lock in the rate for decades to come.

Insurance-comparison site Policygenius can help you find the right coverage at the best rate for you »

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