Life Insurance

Life Insurance

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How Much Life Insurance Is Enough

Determining whether or not you want/need life insurance is only half the battle.  Once the decision has been made to purchase life insurance, you will need to determine exactly how much coverage you need.

It’s very difficult to use a general rule for how much insurance is necessary since each individual situation is unique.  Some people will be looking to spend the lowest amount possible for coverage, while others are willing to pay much higher annual premiums for the peace of mind their loved ones will be more than comfortably taken care of long down the road.  The most important questions to ask is not, “How much insurance do I need,” but rather, it’s better to ask, “How much insurance is required to meet my life insurance objectives?”

A standard rule of thumb to start with is to multiply the annual salary of the insured person by twenty.  However, if the insureds spouse also works, the need for insurance might not be as high as that formula would dictate.  On the other hand, if you have additional obligations, like an extremely high mortgage or high expected education expenses for children, then the standard rule of thumb might produce a number that is too low.

Since the current situation you find yourself in will greatly influence how much insurance is the right amount, it is vital that you review your life insurance needs regularly.  Most people have the highest need for life insurance in their twenties and thirties, and then see their need for high amounts of life insurance begin to fade.  There is certainly no need to pay premiums for life insurance that is completely unnecessary.

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Life Insurance Resources

Important: although the information presented on this page was provided by the experienced insurance specialists at, it's use is strictly limited to educational and informational purposes. This information is not to be used in place of the consultation provided by a licensed insurance representative or legal advice of an attorney.