Insurance Needs Calculation Example:

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

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

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