There are a million articles and rules of thumb for how much life insurance you “should” have. “Should” is in quotes because life insurance is fundamentally an altruistic act. It's something you do for the people you leave behind because you feel a sense of obligation, duty, or generosity. It is, in short, a mix of financial elements and psychology (welcome to everything in finance!). So rather than a strict equation to determine how much to get, here is a list of categories to consider building into your total death benefit. For any category you want to include you decide how much money you want to cover it. At the end, you add up all the categories to get a final total that represents your specific desires for what you want to provide if you die unexpectedly.
You've probably heard of the concept of “diversifying your portfolio” before, probably when someone is talking about picking their investments. But diversification goes far beyond just investment choices and it's important to think about other ways it impacts your future and planning. One big way is something called Tax Diversification1 and it's a key factor for a successful retirement.