Tom is a 35 year old married man, with 2 children. He earns $50,000 a year after taxes, and has a home with a $350,000 mortgage. He also has a $20,000 car loan and $10,000 worth of credit card debt. Based on the formula described, here is how we would figure out how much life insurance he needs
|Existing Life Insurance||$100,000|
|Income Replacement (X10)||$500,000|
|Credit Card Debt||$10,000|
|Children’s Education (X2)||$100,000|
In total, Tom would require an additional $785,000 to protect his family in the event that he was to pass away.