Some will tell you financial security is “priceless.” But no matter how valuable it is, you should never pay for more than you need to.
Some experts believe you should pay up to 6% of your gross income in life insurance premiums every year.1 We beg to differ. As far as we’re concerned, there’s no one answer for this question. Every family is unique, with their own expenses and obligations.
You know your budget better than anyone.
In a perfect world, we’d all get $10,000,000 in life insurance and would have the money to pay for it. But the reality is, we face other expenses that compete for our dollars: rent or mortgage payments; health insurance; saving for retirement; and just spending some of your hard-earned cash on you, so you can get out there and enjoy life.
So what’s the answer for how much you should spend on life insurance? As much as you feel comfortable spending. Take a good look at how much you make and how much you spend every month and come up with a figure. Is it $75 a month? $50 a month? $20 a month? Great! Then that’s the right amount for you.
How much are other people spending?
We never believe in chasing trends. But sometimes it’s useful to know what others are doing. So we’ve done a little research.2 And here’s what we found:
As you can see, there’s quite a range of responses. So don’t stress about how much other people tell you to spend—you need to do what’s right for you.
Some money-saving insurance tips
- Don’t smoke; or quit ASAP
- A laddering product, like SmartTerm 360 can save you up to 30-50% or more on premiums
- Avoid activities like skydiving and auto racing—they can come with higher premiums
- Competitive prices are good, but the cheapest policy isn’t always the best
- It’s often cheaper to get insurance now than if you wait until you’re older. (Plus, you may not be insurable when you’re older.)
1Miller & Miller Insurance. “Coverage Amounts” (www.miller-miller.com/content/life/coverage-amount). 2SBLI. “SBLI Self-Awareness Quiz,” March 2018.