How much life insurance do you need? Well, you're actually the one best able to answer that question.

Ignore blanket formulas that suggest you need something like five to 10 times your annual income. Each person's situation is different. Look at insurance not as a lottery-like payoff, but as filling a specific need. If you're insuring your own life, you need to think about the financial impact of your demise on your family. Take out a pen and paper. List yourself and the members of your family. List how much money comes in from various sources. List how much various people need each year. And think about how these numbers will change over time.

For example, let's say you contribute $60,000 per year to your family, and your spouse contributes $50,000. That's the extent of your family's income. Perhaps you have two teenage children. Take a deep breath and begin imagining the unimaginable. What if you and your income stream disappear from the picture? Will your spouse and children get by on just the $50,000? Think about how much additional income they'd need. If your kids are in their late teens, they're probably not too far away from being able to support themselves. You'd need greater insurance coverage if the kids were still toddlers.

Think about the contributions you would have been making over the years to any college funds or to your retirement nest egg. You'll want your insurance policy to fill those gaps. Are you also supporting your mother-in-law? If so, you'll want to make sure she isn't left in the lurch should you get run over by a bus.

You also have to consider additional expenses your spouse will face as a single parent. With two toddlers or an aging parent to support, for example, will he or she be able to pay for the extra childcare help, maybe get a lawn-care service for the house, afford daytime help for the mother-in-law, and still be able to work if you die? If not, you need insurance to cover your spouse's lost income and the added expenses he or she will face.

If your kids' future educational costs are already covered and your mother-in-law has sufficient insurance of her own, you may not need very much in the way of insurance. And if you're single with no dependents, you may not need any at all. If you die, you will be missed, but your income stream won't.

Spend some time thinking about how much coverage you need to protect your loved ones from financial hardships posed by your death. You may need a lot of coverage now, and much less a few years down the road.

We offer more information in our Insurance Center, and you can get your questions answered on our Insurance discussion board -- or just drop in to see what others are saying there.

You may not have thought about some kinds of insurance, such as disability or long-term-care insurance, but they're vital for many people. Take a little time to learn more, and you may be very happy you did, if some calamity occurs in the future.