How Much Life Insurance Do You Need?

Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.

Blocks are stacked and lined up to spell "Life Insurance."
(Image credit: Getty Images)

Unpredictable investment and job markets are rough on retirement planning. They also complicate the issue of how much life insurance is right for you. Standard formulas — such as buying coverage equal to eight to ten times your annual income — aren’t always appropriate, and while they can be helpful, online calculators will sometimes tell you to raise your coverage by $1 million even if you already have insurance. 

The truth is, there are many factors that influence how much life insurance you need. Here's what you need to consider. 

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.

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