Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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How much life insurance do I need?

Knowing how much life insurance you need is a very important aspect of taking out a policy. Too much life insurance is a waste of your money. Not enough life insurance leaves your loved ones short for things you want to provide for.

Many sources say that the standard guideline is to buy life insurance in an amount equal to 7, 8 or even 10 times your salary. While this is an accurate response in many cases, it may not always be the right one. However, there are many things that can impact how much life insurance you actually need.

Read on to learn a little bit about conducting a life insurance needs analysis of your own or with an agent or financial planner and then no matter how much life insurance you need be sure to enter your zip above for free insurance rates!

Factors Concerning Life Insurance Limit Choices

When making a realistic determination of how much life insurance is necessary to carry, it is important to consider all the relevant factors in order to arrive at the right amount.

Consider how much you currently earn and multiply it by the number of years you need to provide for your family. This should give you a baseline amount to work with for the level of coverage you need. If there is another income earner in your family you may be able to take out a policy for less, especially if your salary provides for surplus expenses.

If you have outstanding debts, including mortgages, car loans, consumer debt, business loans not covered by other policies and even student loans, it makes sense to be sure that your life insurance policy will take care of them so that your loved ones are not stuck paying them off with money that should be used for other things.

It is vitally important to consider the needs of your family. If you have small children, the need for a hefty life insurance policy is more critical than if you have children who are grown. What you want to provide for should also be analyzed. If you want to make sure there is enough money to cover education costs for your children, you should find out how much that education will realistically cost. You should also make sure that your final expenses are provided for either by prepayment or through your life insurance proceeds.

You may reduce the total of all these things somewhat if money will come from other places upon your death. If you have financial assets or other life insurance policies through work or other sources, you can deduct the totals from the amount of life insurance you need, in order to arrive at the amount of coverage you should purchase.

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Don’t Let This Happen to You

It is easy enough to let someone else, like a life insurance agent, make the decisions for you in regards to life insurance coverage. Don’t let that happen. While agents offer seemingly wise advice, many of them are foremost interested in their commission. This is one area where you should take the time to do your research and make the necessary decisions yourself to meet the needs of your loved ones.

The variables that impact how much life insurance you need are dynamic. They change throughout your life. Therefore your insurance needs will grow and diminish throughout the different seasons of your life. Don’t allow someone to encourage you to take out a large whole life policy based on your present needs. A good choice for life insurance coverage may be a smaller whole life policy and a larger term life policy to cover changing needs and things that will likely diminish as you get older.

Finding the Right Life Insurance Policy

Whether you are looking for term life or whole life insurance, you can easily figure out how much life insurance you need by using an online tool that does all the calculations for you. Such tools require you to answer a variety of questions concerning the important factors you must consider when selecting how much life insurance you want. It then computes the information and gives you an amount.

When you know how much life insurance you want to carry, the next step is to shop around for the right company. Using a free online quote tool, you can easily shop around for the best price from a variety of companies at once. When you use a quote tool, you answer questions just once and your information is submitted to different companies, so you can get all the information you need to compare and make the best choice possible for coverage.

Get started today looking for the right life insurance policy for your needs by putting our online quote tool to use right now!