How do I know how much life insurance to get?

Asked by Patrick from Mission Viejo, CA


Thanks for the question. There’s a lot of confusion and misinformation surrounding this issue, but there’s actually a simple answer to your question. Ready for it?

It depends.

There is no one-size-fits all approach to getting enough life insurance. There is no magic salary multiple (despite what Suze Orman would have you believe).

The amount of life insurance you will need will depend on a handful of factors, including but not limited to:

  • Income (incl. ‘hidden’ income*)
  • Age
  • Number of dependents
  • Other assets
How do I know how much life insurance to get?
How do I know how much life insurance to get?

Here’s what the Insurance Information Institute has to say: “If you have dependents, buy enough life insurance so that, when combined with other sources of income, it will replace the income you now generate for them, plus enough to offset any additional expenses they will incur to replace services you provide (for a simple example, if you do your own taxes, the survivors might have to hire a professional tax preparer). Also, your family might need extra money to make some changes after you die. For example, they may want to relocate, or your spouse may need to go back to school to be in a better position to help support the family.”

The best way to get the right amount of life insurance is to speak with an insurance agent you can trust. Explain your situation—everyone has a unique one—and go from there.

* Here’s an example of hidden income, courtesy of the Insurance Information Institute (III): health insurance. If you have a spouse or child on your company’s group health insurance plan, your death will effectively halt that source of ‘income.’



Please note: InsureMe Answers is not intended to be a substitute for advice from a licensed professional. For specific questions about a policy or claim, please contact your insurance agent or company.

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