How Much Life Insurance Is Enough Life Insurance?

Updated: April 27, 2012

When buying life insurance most people will ask themselves, "How much life insurance do I need?"

For obvious reasons, having too little life insurance is undesirable. It's also undesirable to have too much; it will only cause your insurance premiums to be needlessly high. So before you buy, review your needs and what it is you want your coverage to achieve and go from there. For example, do you want to have enough coverage that'll:

• Pay your funeral arrangements?
• Pay the outstanding balance owing on a mortgage and other debts?
• Help your family offset the loss of your income? For how long?
• Contribute to the future education of your children?
• Leave something "extra" to your parents or other family members?
• Leave a legacy with a charity?
• A combination of all or part of the above?

Knowing what you would like to accomplish with your life insurance policy will help you determine how much life insurance you need to buy.

A good starting point when you are doing your preliminary quote comparisons, is to have an amount of life insurance coverage that equals five to 10 times your annual, before-tax income.

Price may also be a consideration. Once you have an idea of how much life insurance you need, compare life insurance quotes for term life insurance (it's the most affordable) to see how much it may cost. It's easy to do, will take you less than a minute, and can be done online.

Life insurance shopping trends

Last year, Kanetix.ca shoppers obtained quotes for the following life insurance policy face values.

For individuals comparing life insurance quotes:

• 15% were for face values under $100,000
• 26% were for policies that ranged from $100,000 to $200,000
• 41% were for policies that ranged from $250,000 up to $500,000
• 14% were for policies ranged from $500,000 up to $1 million
• 4% were for policies that were over a $1 million

For couples (who compared joint life insurance quotes):

• 7% were for face values under $100,000
• 20% were for policies that ranged from $100,000 to $200,000
• 51% were for policies that ranged from $250,000 up to $500,000
• 19% were for policies ranged from $500,000 up to $1 million
• 4% were for policies that were over a $1 million

Visitors to Smart Finance can get life insurance quotes for policies ranging from $50,000 to $2 million. There is a wide variety of term life insurance products available too: Term 10 life insurance, Term 20 life insurance, Term 30 life insurance and the Term to 100 policy. All offer premiums guaranteed not to increase during the term of the policy, an appealing feature for many life insurance shoppers.

Looking for more information about life insurance?

Buying Term Life Insurance - From Agent or Through Insurance Website

Buying Term Life Insurance - From Agent or Through Insurance Website

When you buy term life insurance there are two common ways you can do it - it is either you buy though an insurance agent or by making an online purchase through insurance website. However, before you decide which way you should go, you need to see to it that you are sure enough that you are making insurance transaction with the right company. And with that, the following can help you make the right decision.

Are your prospects proven legitimate?

Insurance service provider's reputation is of great importance as you want to make sure that you are only making transaction with a trusted one. For insurance websites, see to it that it is legitimate as there are a lot of scams online. You must also check prospective agent's reputation. As a general rule, you need to check if they have a physical address. If a particular agent or website cannot provide even its/his office address, it's a good reason to be skeptic.

Have they recieved the necessary accreditation or certification?

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Another criterion you need your prospects checked is their accreditation or certification. A reputable website should have badges from reputable business accreditation companies (e.g Better Business Bureau). In California, for instance, you can check if a particular insurance company or agent in the area is following the laws governing insurance policies by checking its/his status through the state's Department of Insurance.

Are they affiliated to reputable insurance companies?

Another way of determining how reputable an insurance website or agent is to check if it is affiliated to some of the reputable names in the industry. This would suggest that your prospect is stable and is capable of giving the kind of service that you need.

How about insurance quotes they are giving?

This is another area that you should not miss checking. The drawback of online insurance quotes is that they are not giving the kind of policy computation that is specific to your unique needs. Most (if not all) of online quotes allow you to provide very limited information and this is the cause of miscalculations. This is the reason why a lot of experts recommend talking to an insurance provider or agent - whether over the phone or in person. It is the only way to get the most accurate calculation on how much is the policy should cost based on your unique conditions.

What people are saying about your prospects?

Lastly, check what people are saying about your prospects. The number of positive reviews, most especially from previous and current clients, is an important indicator of how reputable your prospects are. Make sure you take a look at this criterion.