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We challenge the notion that you need five to seven times your gross annual income in life insurance.
Next time you hear the oft-repeated nugget of wisdom that you require five to seven times your gross annual income in life insurance, ignore that advice. Glenn Cooke, an independent broker who operates Insurecan.com, calls that rule “arbitrary and insufficient.” While someone without dependents won’t require insurance, Cooke says an individual making $50,000 a year with young kids will require up to 80% of their income for 10 to 20 years. That comes out to $400,000 to $800,000. Cooke recommends using a life insurance calculator, but says basing coverage on 10 to 15 times your salary is “a pretty good rule of thumb.”
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