Before you answer this question, you need to identify the different areas of your life that need to be protected by life insurance. Once you do, you can begin to plan for the correct life insurance amount.

Choosing the right dollar-benefit amount for your life insurance requires some consideration. You can start by looking at your present financial situation, such as your income streams and debt levels: how much of your income covers your bills.

You can get a quick estimate of how much life insurance you need by totaling all your debt. Once you know how much you owe, you can make projections based on that amount. This allows you to estimate an adequate life insurance benefit amount that could help cover those costs.

Or, you could base the amount needed on your salary, outstanding debt and expenses. For example, if your annual income is $30,000, you can multiply that amount by how many years you believe your family would need to have an income stream to cover their living expenses. If you assume five years, then your initial estimate is $150,000; your salary multiplied by five benefit years. Once you have this amount, you need to account for all your outstanding debt and expenses: mortgage amounts, education, funeral costs. For this example, the amount will be $220,000. Therefore, you get a total of $370,000: $150,000 based on your salary and $220,000 from your debt.

Once you have a total amount, you can subtract it by any other income sources or assets you may have, such as: investments, cash reserves, pension survivor benefits and other life insurance, including employer-provided insurance policies.

In order to purchase a life insurance policy that will adequately protect the financial needs of your family, you need to inventory your assets and debt.