1. 61667 POINTS
    Steve SavantPRO
    Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona

    Video Transcript: Hello, everyone. I'm Steve Savant, syndicated financial columnist and host of the weekly online talk show "Steve Savant's Money: The Name of the Game."

    I'm answering questions from insurancelibrary.com, and I got this question. It says, "Is there a limit on how much life insurance I can purchase?"

    Well, let's say I'm going to purchase it on myself, and I need to be able to use financial justification. Financial justification simply means that I have to be able to verify and validate the reason I have coverage. And if I have huge income and I have a massive amount of assets and I'm looking at a future date on which I think I will die based on my life expectancy, then I can go all the way up to those limits.

    Sooner or later, I'm going to hit a limit because I will not be able to justify it. So, can you buy it on as much as you want? The answer is no. You have to always base your thinking on what do I need to cover all my liabilities, my taxes, and transfer issues at death, and when do I think I'm going to die. Those are the numbers I'm looking for at whatever inflation rate of return that I use as my reference point.

    Well, that's our consumer question for today. If you have any questions, just submit them to www.insurancelibrary.com.
    Answered on July 21, 2014
  2. 63333 POINTS
    Peggy Mace, Certified Senior Advisor (CSA)®PRO
    CEO, Outlook Life, Inc, Most of the U.S.
    Yes, there is a limit on how much life insurance can be purchased by one person. That limit is based on income, assets, debts, and age. Generally speaking, young adults can purchase approximate 25 times their annual income in life insurance coverage, while seniors can purchase about 10 times their annual income. However, assets enter heavily into the calculation for seniors, so that even if a person in their 70's is living off Social Security, they could qualify for over $1,000,000 of life insurance if they have many assets. 

    The company you purchase your policy from can make a difference in how much life insurance you qualify for. So it never hurts to shop from a broker who can help you get the most coverage.
    Answered on July 30, 2014
  3. 7479 POINTS
    Steve KobrinPRO
    President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
    Sure. Financial institutions always set limits on the money they make available.

    For example, banks limit how much money they will lend you for a mortgage or business loan.

    Credit card companies limit the amount of credit they will extend you.

    Venture-capital firms limit the amount of money they will invest in your company.

    Life insurance companies generally look at your cash flow, debt, and net worth. Pretty basic stuff.

    Things get exciting when you have exceptional needs.

    For example, how much money insurance will they let you buy on a minor child? Or an elder parent? Or a former spouse?

    Certainly, there are limits in all these situations. But the negotiations about the maximum available becomes interesting.
    Answered on June 2, 2015
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