How Much Life Insurance is Enough?

At some point in our lives, we all ask ourselves that how much life insurance we need? It may differ according to what stage of life you are in. If you are not married and don’t have children, you probably don’t need much coverage.

If you are a currently married couple and you have acquired bills in the form of installments of several cars and new apartments, you definitely need an insurance cover for all, or some of those properties.

What actually matters is you have to start with a figure. Once, you have decided it, seek more advice from a company you have chosen to insure you. Determining the needed amount of insurance can be complicated. A general rule says that you must have an amount equal to five times your annual pay. However, you are the only one who can decide the necessary amount with careful and proper analysis rather than using a broad formula.



There are two types of insurance:

  1. Term life insurance

  2. Permanent coverage insurance.

The analysis is based on the fact that most of your important financial goals and targets are given the highest priority. The planning helps report mortgage debt, college payments for children, and future family expenses as well as to give makeup for income tax liabilities. Similarly, how much debt you have also decided how much the insurance you require!

Now coming towards these factors to consider, here are some tips that will shed some light to you so that you can decide about your life insurance policy accordingly.


The first point that must be considered is that your life insurance must suffice your mortgage debt. If you are carrying a large mortgage debt, you may need a big amount to recover.


In case you are married and have children, you need to make sure that their studies must continue in case you pass away unexpectedly. The largest amount of life insurance is needed to help cover their college expenses. This again requires proper analysis. Calculations done need to be revised periodically according to the need of time. Taking into account all costs is important, this includes tuition, insurance (teenage insurance policies can get expensive!).


You and your spouse are each other’s support. Even if both are earning, you still need to maintain your partner’s lifestyle. If one of you dies unexpectedly, the surviving one needs to recover the financial loss. Life insurance works best at this point. Though it cannot give you a moral support, it can be your source of financial relief. Life insurance also plays a role in maintaining the current lifestyle of your family.


Life insurance is the best way for establishing a makeup at death to pay the income taxes of the state.

Alternatively, if you have no children and no dependents, and you are not indebted then you may need no additional life insurance. Similarly, if your assets and retirement plan death benefits are sufficient to recover you dependents’ needs, you are very much secure without insurance. Always, try to make a difference between your available resources and total needs. So that you can make a proper figure out of it for your life insurance.

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