How much life insurance is enough?
If you're married you would love to have a $1m+ to leave your spouse but the premiums for that amount are fairly restrictive. This article suggests 7 to 10 times your current annual salary which means for a $50K wage you would need $350,000 to $500,000 inlife insurance.
It's a topical discussion for my wife and I at the moment as we're sorting through some of our insurances. I think we've come to a conclusion that we need enough insurance to pay the mortgage out, pay all funeral expenses and then allow at least a couple years worth of salary to survive on for whoever's left.
It all depends on your life situation too. If you're single with no dependants you may not even bother with life insurance whereas a couple with kids will most likely need a substantial amount. My advice - work it out early and plan to make adjustments at regular intervals - perhaps every 3 years or so.
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Comments
This really is a tough question. I think at a bare minimum you've got to try to cover any outstanding morgage amount and enough to cover funeral costs. I think they plan you and your wife have made would be more that enough.
Posted by: Kirby | February 22, 2006 8:15 AM
Yes Will. The worst scenario is not getting enough and leaving your spouse in a predicament that is harder to bear than just your death.
Posted by: Stuart | February 22, 2006 1:43 PM