How Much Term Life Insurance Do You Need?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Life insurance companies use formulas to determine how much term life insurance you qualify for. It is not a bad guide for determining how much life insurance you need. At younger ages, they will allow you to take out about 25 times your annual income. E.g. If you make $40,000 per year, you could get about $1,000,000 of coverage. That factor gradually decreases to about 10 times your annual income at retirement age, even less in your old age. However, insurance companies take assets into account, so if you have many assets, you may need more life insurance than that factor indicates.
    Answered on September 26, 2014
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  2. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    You should purchase enough term life insurance to cover all of the debt left behind for your loved ones plus at least 10 times your annual income. The thought is at ten times your income can be invested so your loved ones can live off of the interest with no debt. Be sure to purchase the right amount of term years as well. For example, if you have a 20 year mortgage be sure you have a 20 year term policy to offset that debt. Don't worry if it is a bit too much, I have never had a widow say," that is just too much money" when delivering a death claim check.
    Answered on September 26, 2014
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