How Much Life Insurance Do You Need?

While experts often disagree, a general rule of thumb is to assume you should have 5 to 7 times your annual salary in life insurance coverage. If you earn $50,000 per year, you should have between $250,000 and $350,000 in life insurance. The problem with a rule of thumb is that it may not be appropriate for your particular financial circumstances. For example, if you are the sole wage earner and have a number of small children, you may need coverage totaling more than 10 times your annual salary. If you don’t have kids, have paid off your home, and your spouse’s income is relatively equal to yours, you might need less. Start with the assumption you need 5 to 7 times your annual salary, and then add or subtract based on your individual circumstances and level of comfort with the risk your family faces if the worst does happen.