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I have delivered several life insurance checks to beneficiaries and never once has anyone said, “Wow, that’s way too much.” I don’t really think you can have too much life insurance, but you can definitely have too much premium. Of course it makes no sense to sign up for a policy that you can’t afford. You also don’t want to apply for a death benefit that is considerably more than you really need either. You would obviously be paying more each month than you really need to, and that money could likely be put to better use elsewhere.

Most insurance companies will allow someone up to age 55 to purchase up to 20 times their salary. After 55 to 60 or so, they reduce to about 10 times salary. Other circumstances can be considered such as debt and net worth.

When you are deciding on a life insurance policy, the two questions to answer are first, how much insurance do you need, and second, what type should you buy. So how do you answer the “how much insurance do I need” question.

How much insurance

There are two ways that I have used over the years to tackle the how much insurance dilemma. You can use a multiple of salary that make sense, or you can analyze how much money would be needed if you passed away tomorrow and add it up. Do you need money:

1. To pay off a mortgage.
2. To pay off other debt or loans.
3. To set aside for kid’s college funds.
4. To replace your income for your family for a period of time.

When we add it up we get a number that should have us in the ballpark for how much insurance makes sense. We then take a look at the premium for that death benefit. Is this something that can fit in your budget?

There is no one right answer as to how much insurance you need, but something is always better than nothing and erring on the high side is advisable if you have a young family and the premiums are affordable.

Call us at (615) 376-8899 or browse for quotes at We’ll help you determine how much insurance you need and review quotes from multiple companies.

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