How Much Term Life Insurance Do I Need?

Shawn Plummer

CEO, The Annuity Expert

How Much term life insurance do I need?

The amount of term life insurance you need can vary based on your individual circumstances. A common guideline is to have 8 to 10 times your annual income in life insurance coverage. However, several factors can influence this amount, including your financial responsibilities, debts, and the needs of dependents.

Factors to Consider

  1. Income: Multiply your annual income by 8 to 10 times. For instance, if you earn $50,000 per year, you should consider a policy between $400,000 to $500,000.
  2. Debts: Include any outstanding debts like mortgages, car loans, or credit card debt.
  3. Future Obligations: Factor in future financial obligations such as college tuition for children.
  4. Dependents: Consider the number of dependents you have and their financial needs.
  5. Spouse/Partner’s Income: If applicable, factor in your spouse or partner’s income and how much they would need to maintain their lifestyle.

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Example Calculations

  • Single Income Household: If your annual income is $60,000, and you have a $200,000 mortgage, your recommended insurance coverage would be $680,000 to $800,000.
  • Dual Income Household: If both you and your partner earn $50,000 each and have a $300,000 mortgage, the recommended coverage for each would be $550,000 to $650,000.

Conclusion

Determining the right amount of term life insurance involves assessing your annual income, debts, and any future financial obligations. Generally, 8 to 10 times your annual income is a recommended starting point but consider your unique circumstances. This coverage ensures that your dependents are financially secure in your absence.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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