There are two basic methodologies in determining your life insurance needs. First, is the earnings approach, in which you establish the amount of annual salary (usually 5-20 times the gross salary) of the breadwinner in your household. A second method is the budget approach to meet the family’s needs (both current and future) after the death of the breadwinner. In both examples, you need to make sure that you adjust the total needs to present value.
Again, these are two rudimentary methods in determining your life insurance needs.
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