Life insuranceYou may have heard a lot about the importance of buying life insurance, but you may not be sure if it applies to you.

Well I have a newsflash for you: It does.

Before buying life insurance, it’s important to consider how much coverage you and your family will need. One of the biggest excuses I hear that life insurance is too expensive. That couldn’t be further from the truth. Buying an affordable policy is easier now than ever. These tips will help you estimate an amount that works well for you.

Consider end-of-life expenses

Funerals aren’t cheap, even when you take the least expensive option. Do you know what is cheap, comparatively? Life insurance.

When my father passed away, the funeral expenses totaled just over $10,000. Thankfully, he had taken out a life insurance policy big enough to cover those expenses. Plan for your family to spend at least $15,000 on your funeral.

Remember your debts

When a person dies, he or she often leaves behind a lot of unpaid bills. That could include a mortgage, a car loan, or other debts that need to be paid.

The mortgage should take top priority. Without enough money to pay off the mortgage, your family could lose their home.

Make sure you purchase enough coverage to pay down the mortgage. That amount will differ significantly from person to person. If you have owned a house for 20 years, then you might not have a mortgage at all, or you might have only a small amount left to repay on the loan. But if you’ve recently purchased a home, you might need $200,000 or more to cover that expense.

Paying for college and other expenses

If you have kids, you may want life insurance that will help them afford major expenses, such as buying a car or going to college.

It’s difficult to determine how much money your children will need to pay for school. The younger they are, the harder it is to make an accurate estimate.

For example, if you have a 16-year-old who has already shown interest in attending a public university with in-state tuition, then you can estimate how much that will cost (although the cost will vary depending on both state and school).

However, if you have a newborn, then you have no idea what he or she will want to do. Your child may excel in school and get into an Ivy League college that costs $50,000 a semester.

The best thing you can do is look at the current tuition of a college you think your child will attend. Considering that tuition rates have risen by about 5 percent a year in recent history, go ahead and use that number to decide how much money your kids may need.

Replacing your income

Because you have accounted for your mortgage, future major expenses, and burial, you don’t need to replace your full income. It does make sense to replace a portion of it, though. Once you’re gone, you can’t pick up extra shifts to help your family make ends meet during rough months. It’s better to be prepared so that your family doesn’t have to suffer.

Many life insurance experts say that you should divide your annual income in half and then divide that number by .05 . This means if you make $50,000, you should have $500,000 of coverage to replace your income.

If you earn considerably more than your spouse, then you might need to replace more of your income. You might also need more income replacement if you have a family member with persistent medical issues that cost a lot to treat.

By adding these four items together, you can get a rough idea of how much life insurance coverage you will need.

Jeff Rose is a Certified Financial Planner and Iraqi combat veteran. He blogs at Good Financial CentsSoldier of Finance and Life Insurance By Jeff.