How to assess your life insurance needs

By Ginger Applegarth

What's your life worth? If you've shopped for life insurance, that's sort of what you're trying to find out. Chances are, you've heard different people suggest vastly different calculations on how to reach the right number.

The problem is that every person's situation is different, and although your financial situation may look the same as your colleague's, your needs are different.

MSN Money's Life Insurance Needs Estimator is based on a time-tested method used by reputable agents and financial planners for decades: the capital-needs analysis. The beauty of the capital-needs analysis is that it takes into account all of the quirks that make you and your situation unique.
Figuring out how much life insurance you need shouldn't be a guessing game. You can assess your needs -- and the needs of your loved ones -- and make a calculated assessment.
The Needs Estimator walks you through typical costs, such as a funeral (the average funeral in the U.S. is now about $6,500, though the true sum can easily reach $10,000 once a burial plot, flowers and other costs are included), to the atypical, such as the special-needs slush fund most people should include in their insurance calculations. (A safe estimate is about $20,000 to $25,000 to cover unexpected expenses.)