How Much Life Insurance Is Enough?

Many of us have life insurance through our employer or one of the big insurance companies, but how do we know if it’s enough?  The answer is complicated but it’s important to think about income protection before it’s too late.

Since most of us love our families, we want them to be financially set for the rest of their lives should something happen.  Life insurance enables us to provide for our families no matter what happens.

There’s a lot to consider when purchasing life insurance though and you’ll have to decide as a family how much to set aside for monthly premiums and what payout you’ll require.  Here are some things to consider when determining how much protection you’ll need.

How Old Are Your Kids?

Remember how much money you used to have before your kids were around?  Weekends in Paris, birthday trips to Hawaii, those were the days right?  Well maybe not that extravagant, but most of the couples I know without kids seem to be doing pretty well money-wise.

But alas, a child is priceless and even though they can be a pain at times, the bond between parent and child is something that no amount of money could ever replace.  But the younger they are, the more expenses there are since you still have to pay for college tuition, high school sports, etc.

Make sure you take into account the age of your children and adjust your policy accordingly.  You wouldn’t need the same level of coverage once your kids have gone off to college.

Can Your Spouse Return To Work?

If you’re a single income family, then you need to consider the possibility of your spouse returning to work if something should happen to you.  Some industries are definitely easier to get back into than others.

If your spouse started a career then left to take care of the kids, it should be a lot easier to return back to work than if they were to have never started a career in the first place.

A Life of Luxury is Something You’ll Have to Sacrifice

The odds of something happening are pretty slim, but things do happen once in a while.  You don’t have to leave your family out to dry but you also don’t need to provide a lavish lifestyle for them once you’re gone.

Losing a parent is tough, and it will force your family to make sacrifices.  Maybe your kids need to spend two years at community college before transferring to a four-year school. or maybe they need to go to a public school instead of private from now on.

I don’t think it’s a smart financial move to overpay for insurance since the odds of something happening are so slim.  Money will never replace anyone so don’t get caught up in providing a life of luxury once you are gone.  Provide enough so that your family will be comfortable and able to maintain a semblance of their normal life should something terrible happen.


  1. Many households today have two incomes, and both are needed to make ends meet. This becomes even more important when the kids come along. You mention that odds of something happening (death of a spouse) are pretty slim.

    Did you know that the odds of one parent being disabled and losing income are much higher (1 out of 3)? And if the family is planning to have more children the odds of mom getting an unpaid leave (if she works in the U.S) is almost 66%. Disability insurance may be a better play.

  2. Life insurance is definitely on my and the new HB’s list of to dos. Thanks for the reminder!

  3. So I’m single with no kids.
    I had a simple policy for the sake of my folks not to have to paid my debts if I kicked off early.
    It was like $12/mo. for $100k coverage.
    I now have 50%+ equity in my home and no other debts so I figure this covers my debts.
    Plus, every bank account offers a free $1-3k life insurance for signing a piece of paper and putting it in the mail, so I slapped a few of those is the deposit box.
    So I canceled the term policy for the time being.
    Think that’s dumb?

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