How Much Life Insurance Should I Have?

When purchasing life insurance, think about your goals for your overall financial strategy, your economic value to your loved ones, as well as your wishes for your survivors.

You'll need to calculate your economic value – the value of your future earnings over your lifetime – to be used for the care of your loved ones. Factors that help determine this are:

  • Your current annual earnings.
  • The amount your annual earnings increase.
  • How many years you plan to work until retirement.
  • The rate of return you expect your invested assets to earn.

You should also consider how much of your future economic value you want to replace in the event of your death. This will depend on the financial goals you set for yourself and your survivors.