Net worth plays a crucial role in determining the amount of life insurance coverage one requires, as it represents an individual’s financial health and overall assets.
Calculating net worth involves subtracting liabilities from assets. For instance, if an individual has assets worth $250,000 and liabilities amounting to $100,000, their net worth would be $150,000. Understanding one’s net worth is essential for informed financial planning and ensuring adequate life insurance coverage in case of unforeseen circumstances.