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How much life insurance do I need?

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How much life insurance you need is specific to your own individual circumstances and standard of living. Getty Images

Life insurance, similarly to other traditional insurance types, is something you hopefully won't have to deal with often. Once set up properly, it should just be another bill you pay for security and peace of mind. But the importance of having it - and having the right amount - cannot be understated. 

With many life insurance types to choose from, the terms, conditions and applicable circumstances vary. The proper amount each individual needs depends on their own personal financial situation.

If you don't have life insurance - or want to get more - now is a good time to act. Don't hesitate and get a free estimate today.

How much life insurance do I need?

How much life insurance you need is specific to your own individual circumstances and standard of living. There are a series of questions you will need to answer to help drill down to a specific number:

  • Are you the sole income earner? If so, then you'll likely need more coverage than if you were married with two sources of income. 
  • What are your long-term plans? Are you set financially or are you still years away from paying for expenses like your children's college education? Where you are in your life will help determine how much life insurance you need.
  • How healthy are you? Life insurance companies will want to determine your health before agreeing to insure you. But you should also be honest about how you feel and what your plans are should an emergency arise. It's better to be safe than sorry and that may mean taking out more life insurance than you think you currently need.
  • How much debt do you have? And who will pay it should you pass? If your home is paid off and kids are grown and out of the house you may need less insurance than someone with the opposite circumstances.
  • What standard of living are you and your family used? Sure, insurance can cover the basics but if you only insure yourself for that - and are used to living (and have bills) at a higher cost - your insurance amount should be set accordingly.

If you don't have life insurance or are unsure if you have the right amount, act today. You can get the latest information on providers, review local companies and compare rates now. Use the table below to get started.

To help better determine how much life insurance you need, it's helpful to understand what life insurance actually is and why it may be necessary for both you and your family. 

What is life insurance?

Simply put: life insurance is insurance that covers you, the individual, in the event of your death. Similar to how car insurance covers your vehicle if there's been an accident and home insurance covers damage or repairs to your dwelling, life insurance covers you monetarily after you have died. In exchange for payments made directly to an insurance company or through other means (like an employer), an insurance company will pay your beneficiaries an agreed-upon lump sum in the event of your death. 

You don't necessarily need to die to get paid, however. Depending on the terms and conditions of the insurance plan you have, other instances (like terminal or severe sickness) could also trigger a payout.

There are two primary types: term life insurance (a pre-determined set amount of time in which you'll be insured) and whole life insurance (which remains active for a full lifetime).

Whole life insurance policies come with a unique cash-out option that allows policyholders to use their policy while they're alive. Just note that, because of the cash factor, whole life insurance policies are typically more expensive than term plans. And you won't have immediate access to cash once the policy goes live. You'll still need an adequate cash amount in the account before you can use it (and it takes time to build that up).

It helps to consult a life insurance expert. They can answer any questions you may have and help you get started with a policy that you can access for cash.

Why do I need life insurance?

You need life insurance for the same reason you need all other forms of traditional insurance: to protect you and your family when unfortunate events arise. The financial impact a loved one's death can cause would be significantly reduced if the person had life insurance and was covered for an appropriate amount.

In short: There is no set amount of life insurance everyone should have. It depends on a variety of factors (including how much you're willing to pay in premiums each month). 

Not sure how much life insurance you really need? An online financial adviser can help determine the right amount to cover you and your family. 

How much should I pay for life insurance?

When considering how much life insurance you need, the question of cost will inevitably arise. As with many personal financial products, it's best to shop around to compare rates and services in order to get the best deal for you and your family. With that being said, it's difficult to provide a standard range for how much someone should pay for life insurance since there are so many factors involved. 

Besides comparison shopping, however, there are some reliable ways to get inexpensive life insurance. This includes signing up with a plan early (life insurance will only become more expensive as you age), choosing term versus whole life insurance (whole has that cash option but it's also usually pricier) and paying annually (some companies will provide a discount if you pay in one lump sum each year versus paying monthly).

There are other ways to get inexpensive but reliable life insurance plans. Speak to a life insurance expert today who can help steer you in the right direction. 

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