How Much Life Insurance Should I Have if I Make $50,000 a Year?

If you have people in your life who depend on you financially, then it's really important to buy life insurance. That way, if you were to pass away, they'd get a benefit that could potentially help them pay their bills without financial stress.

The amount of life insurance you need will depend on different factors. And your income is one of them. In fact, it's fair to say that someone earning a higher salary needs more life insurance than someone with a lower salary. And so if someone earns a $50,000 annual salary, it's probably best that they purchase at least $500,000 of life insurance, and possibly more.

Make sure you get enough coverage

As a general rule, it's a good idea to buy enough life insurance to cover 10 times your salary at a minimum. Dave Ramsey, for example, says that a policy worth 10 to 12 times your annual income is a good bet.

But you may want your life insurance policy to do more than just replace a decade of earnings, or something in that vicinity. You might also want to secure enough coverage to pay off existing debts you share with someone else.

Let's say you're married and have a $150,000 mortgage loan. If you were to pass away, your spouse might struggle to cover that mortgage -- especially if they're not working right now because they're providing full-time care for your young children. So in that case, if you earn $50,000 a year, you may want to aim for a $650,000 life insurance policy. That way, you get $500,000 to cover 10 years of replacement income, and you also get enough money to pay off your home in full.

You might also want your life insurance policy to include a sum of money to cover final expenses. The average funeral costs between $7,000 and $12,000, according to Lincoln Heritage. Adding that sum to your life insurance benefit could spare your loved ones the stress of having to cover yet another expense.

Choose your insurance benefit wisely

Buying too little life insurance could leave your loved ones in the lurch in the event of your untimely passing. But buying too much life insurance can be problematic, too.

If you secure more coverage than what you really need, you might end up struggling to cover your premium costs. And if you don't manage to pay your premiums, your coverage could lapse.

As such, if you earn $50,000 a year, it's absolutely a good idea to aim for $500,000 in coverage at a minimum. And you can add to that total based on your existing debts and needs.

But do you need a $1.2 million life insurance policy when your family is used to living on $50,000 a year? Probably not. And if you push yourself to buy extra life insurance, you might end up falling behind on not just your premiums, but other bills. You might also struggle to add to your savings -- retirement and otherwise -- so it's really important not to go overboard.