How Much Life Insurance Do You Need?

How Much Life Insurance Do You Need?

How much life insurance do you need? Just enough, that’s how much.

Buying too much life insurance is a common problem. It’s an understandable problem, but a problem none the less. Buying life insurance is a tough decision. It’s emotional and it’s easy to get away from the cold hard facts.

If it wasn’t hard enough, insurance companies also make it very enticing to buy more life insurance than you need. The price for the next $250,000 of life insurance is usually quite a bit less than the first $250,000. This makes it very appealing to over-insure yourself. You think “why not buy an extra quarter million, it’s only an extra $15 per month?”

But buying life insurance rarely aligns with someone’s personal values. No one wants to buy life insurance. Life insurance isn’t fun, it doesn’t bring you joy, and the only time it becomes useful is when you’re no longer around. What you value about life insurance is the security it provides. So why buy more than you absolutely need?

When buying life insurance, you want to buy just enough to provide that security and not a penny more. So how much life insurance do you need?

When Do I Need Life Insurance?

When Do I Need Life Insurance?

Insurance helps you manage risk. Specifically, financial risk.

Insurance is great for highly unlikely but catastrophic risks. Things like a car accident, large medical expense, house fire, or an unexpected death.

Each of these risks could have massive financial consequences if they were to happen.

Luckily, the chances of these happening are extremely slim, however, there is always still a chance. Buying insurance helps you mitigate that very small chance by insuring against it. If you do experience some bad luck, your insurance will help cover the financial impact.

Before we jump into when you might consider life insurance let’s first cover what insurance is in general.

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