Life insurance is an important factor in successful financial planning, helping to financially provide for your loved ones in the event of your untimely death.

But how do you know how much coverage is enough? How can you determine how much your family will actually need if they no longer have you to depend on?

Identifying the Basics

First, it's important to remember that the central purpose of life insurance is to circumvent financial stress after you die, so income replacement should be the foremost purpose of your policy.

That said, it's important to realize what kind of impact a lost salary would have on your loved ones.

You can start by making a list of what is spent on: Daily expenses Care for elderly family members Childcare Food and clothing Education Mortgage Car payments Credit cards and other debt Next, consider the cost for your last expenses. Today, funerals can easily cost thousands of dollars, which doesn't include any special requests, estate tax or lingering medical bills. And, while most of us don't like to about the end of our lives—let alone the cost—it's important to make sure your loved ones aren't burdened with the cost of your last expenses.

Long-Term Expenses

After you've determined the basic costs, factor in any money you want to leave for your family's long-term expenses like college tuition, mortgage payments and retirement funds for your spouse. You should also factor in any funds you'd like to leave to local organizations or charities.

Determining Your Assets

Once you've determined all your financial needs, it's t

Your assets could include: Cash Savings Stocks Bonds Real estate Pension Social Security Subtracting your assets from your expenses will give you a rough estimate of how much life insurance you should purchase to ensure the financial comfort for your loved ones.

The Next Step

Once you've got an idea of how much life insurance you need, you can begin shopping around to get an idea of how much a policy will cost you. Sitting down with a licensed life insurance professional will also help to make sure you've got all the bases covered.

Nonetheless, it's important to do a little homework before meeting with a life insurance agent to avoid purchasing coverage you may not need—helping you secure the most affordable life insurance around!