Richard's Recommended Coverage ($344,000).

If vital income will be lost upon death, that income must be replaced. But how much is enough and how do you calculate the amount? BCN recommends that you insure at LEAST 50% of salary PLUS 10% for each dependent child (here 70% of Richard's salary equals $3,668 per month). To convert that monthly Replacement Income into an equivalent Lump Sum, we use a projected return on investment: currently 6.50%. Finally, we SUBTRACT the value of Richard's Non Job-Related benefits (payable no matter what the circumstances of death). The result is Richard's recommended coverage: $344,000 ... an amount based on objective criteria and BCN's years of experience.

Action Step: Reduce Richard's Personal Insurance.

Richard's Recommended Coverage (Protected Salary = 70%).