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

AssetsLiabilities
Savings$15,000
Investment Account$95,000
Existing Life Insurance$100,000
Income Replacement (X10)$500,000
Mortgage$350,000
Car Loan$20,000
Credit Card Debt$10,000
Funeral Expenses$15,000
Children’s Education (X2)$100,000
Total$210,000$995,000

In total, Tom would require an additional $785,000 to protect his family in the event that he was to pass away.

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