How to choose the most appropriate Life Insurance Policy

As long as the fountain of youth has not yet been discovered, we are not going to live forever. No matter how hard we try to ignore it, fact is that we all some day will face death and most likely leave loved ones behind. A life insurance ensures that the loved ones we are leaving behind are going to be fine and abler to maintain their existing lifestyles. 

Some people do nothing to ensure that their loved ones are taken care of after their passing, while others go extra miles to guarantee that their loved ones get financial relief long after they are gone.

If you want to keep taking care of the people you love even after you have passed, it’s simple, either you leave an investment or assets behind, or you get life insurance coverage. 

The idea of getting life insurance seems scary because people don’t want to think about death. However, if you are not leaving assets or a reliable investment behind, then you should get a life insurance policy in place.

There are different types of life insurance policies, each of which are priced differently, so how can you determine the appropriate life insurance policy for you? This is determined by different considerations specific to you alone, so what works for one person, may not work for anyuone else. Selecting the most appropriate life insurance policy depends on what you are trying to accomplish with the policy. Here are a few frequently used methodologies for determining the appropriate life insurance policy coverage:

Formula 1

This formula is also called the ten times income rules. What it entails is that you multiply your income by 10. The rule is outdated and has proven to be of limited value, because it ignores important pieces of the picture. Your children’seducation, debt, income, and mortgage expenses are not put into consideration. The 10 times income rule doesn’t take your family’s needs or your savings into account. Also this formula does not cover stay at home parents.

Formula 2

This formula is similar to the ten times income rule. What makes it different is that it goes a little bit deeper. Here you takeeducation expenses for your kids into consideration. What it entails is that you buy ten times your income plus an extra $100,000 for education. 

Formula 3

This formula is called the DIME formula. DIME stands for “man’s debt”, “income”, “mortgage”, and “education”, and just as the name implies, you need to take those factors into consideration when determining the type of insurance policy to buy.

The DIME formula is more detailed and helps you consider every aspect of your loved ones’ needs even when you are no longer around. With the DIME formula, you can calculate the cost of your present expenses and future expenses to determine how much life insurance is needed. 


The formula you choose is going to help you pick the best life insurance policy. Once you have narrowed your options using any of the above formulas, you can then choose the best life insurance policy to buy. 

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