Some financial service companies and consumer organizations suggest that you need a face amount of life insurance that equals between five to ten times your current earnings. If you're earning $40,000 annually the rule of thumb would be to buy between $200,000 and $400,000 of life insurance. Your financial professional can help you decide how much life insurance is sufficient.

General Considerations

When You're Younger
You need plenty of insurance if you have young children or there are others who depend on you. Your financial professional can help you to decide which type of life insurance is right for you. You should count on keeping a good deal of insurance on your life until the children finish school or leave home, whichever comes first. After that, your life insurance needs will depend on your unique personal and work situation.

When You're Older
Once you retire, you should have retirement savings, and Social Security, but you should still consider the need for life insurance by the time you retire, if you fall into one of the following categories:

You had children later in life. It's wise to keep life insurance at least until the child completes school.

Your spouse couldn't live on your retirement savings, personal savings and Social Security. If you think an additional death benefit will help your spouse if you predecease him or her, consider keeping the life insurance.

You have a sizeable net worth. Life insurance can play an instrumental role in reducing your estate taxes. If you have a sizeable estate in excess of the asset exclusion amount, purchasing life insurance to help pay estate taxes may be part of your estate planning in transferring wealth to your children.