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How Much Life Insurance Do You Need?

Life insurance, in combination with other liquid assets, can ensure your surviving family members of the resources they need to continue their lifestyle and goals. Important goals can include paying off the mortgage, funding of children's education, retirement plans, and having a source of continued income. To survive comfortably, the average to family typically may need a life insurance benefit equal to 5 to 7 times the gross annual income of the insured member. A common strategy is to invest the life insurance benefits and other liquid assets to yield an ongoing monthly income without reducing your capital.

Monthly Income Desired Life Insurance or Interest-Earning Assets Required
$1,000 $200,000
$1,500 $300,000
$2,000 $400,000
$2,500 $500,000
$3,000 $600,000
$4,000 $800,000
$4,500 $900,000
$5,000 $1,000,000

The chart above shows how much monthly income would be produced by liquid assets (life insurance benefits, mutual funds, pensions, or savings) invested at a typical 6% rate of return. Taxes are not included. A home is usually not considered a liquid asset since it is needed for residence.

Questions about the amount of life insurance you need? Speak with a licensed life insurance specialist at 888.733.8376.
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