If you have any dependents who rely on you financially, then you need life insurance. An unexpected life-changing event such as death could be followed by severe financial stress for the ones left behind. When you die, your loved ones, partner or children will need funds derived from your life insurance. Sometimes we might be inclined to say that it’ll be okay and maybe that’s true. However, it’s important to remember that we don’t get a chance to change our minds. There is a wide range of life insurance products, so there is no excuse to neglect to offer a secure future for your loved ones.

Some financial planning experts recommend a rule of thumb that runs anywhere from five to twenty times your annual income. Obviously, that kind of spread isn’t very helpful. So, how do you determine how much you need in life insurance coverage? The best way to figure out what you need is to work with financial professionals. Financial professionals can conduct what is called a financial needs analysis.

Here’s how it works: you start by gathering all of your personal financial information and estimating what your family members would need. To calculate the figure you’ll need to think through three types of expenses. First, your immediate expenses such as money for your funeral, uncovered medical costs, taxes and outstanding debts that need to be paid when you die.

Second are ongoing expenses – money for your family to live on for a specific period of time. Among them could be everyday living expenses like food, clothing, transportation and mortgage or rent payments.

Finally, life insurance proceeds could be used to fund future expenses, such as money for college/university or a retirement savings plan for your partner.

After you’ve figured out your family’s needs, you’ll then want to tally up all of the resources that your surviving family members can draw upon to support themselves. This would include things like savings you have accumulated, your spouse’s income or similar funds, and any life insurance you already own. The difference between your family’s needs and the resources in place to meet those needs determines your need for additional life insurance and determines how much you could of your monthly income to spend on your life insurance premium.

If you have a family, own a home with mortgage or rent payments and don’t want to leave your family stuck with the bills in the case of an unfortunate event, the benefit of having life insurance is that you’ll have peace of mind knowing that your financial obligations are all taken care of.