I Only Make $30,000 a Year. Do I Need Life Insurance?

There are a number of big misconceptions about life insurance that commonly lead people not to buy it. One such myth is that you don't need life insurance if you don't have kids. Another big myth is that it doesn't pay to apply for life insurance when you're young, because in that case, you're paying your premiums for extra years. 

One more persistent myth about life insurance is that if you're a low earner, there's no point in getting it. After all, it's one thing for someone with a $100,000 salary to put life insurance in place. But if you only earn $30,000, is there really a point?

The answer is, absolutely. And while you may not need a particularly large life insurance policy if you make a $30,000 salary, you should have that protection nonetheless.

Your income almost doesn't matter

The amount of money you earn should really not be a factor in deciding whether to get life insurance (though it should be a factor in how much life insurance you get). Rather, if you're on the fence about life insurance, all you really need to ask yourself is: Are there people I care about who stand to get hurt financially in the event of my untimely passing?

It's true that $30,000 is not a very high annual salary. But maybe your family makes it work. Maybe you're married with a spouse and a child, and you maintain a very frugal lifestyle so you're able to get by on a salary of that size. If that's the case, kudos for spending carefully and making the most of that income. 

At the same time, recognize that your family relies on your $30,000 annual salary. Let's assume you're the sole breadwinner in your household. If you were to pass away, how would your surviving spouse and child pay their bills?

That's why you need life insurance regardless of how much you earn. You don't want to leave your loved ones in the lurch.

You may not need a huge life insurance policy

The cost of your life insurance policy will depend on a host of factors, including your age, your health, and the amount of insurance you're looking to buy. Financial expert Dave Ramsey says that a 32-year-old man buying $1 million of term life insurance is looking at a monthly premium of $55.50, on average, for a 20-year policy. But if you only make $30,000 a year, you probably don't need a $1 million policy -- not even close.

As a general rule, it's a good idea to get enough life insurance to replace your income 10 times over. So if you make $30,000 a year, that means you might be just fine with a $300,000 policy. If so, you might end up with a monthly premium you can swing fairly easily.

You might assume that being a lower earner means you don't have to think about life insurance. But remember, whatever income it is that your family lives on, that's the income they'll need to replace if you're not around to work. So rather than assume you don't need life insurance, make an effort to shop around for quotes from different life insurance companies so you can put what's hopefully an affordable policy in place.