How much of my monthly income should go toward life insurance premiums?

Question

Taylor Langlois · Accepted Answer

There's no single fixed percentage that works for everyone, but a common rule of thumb is to keep life insurance premiums somewhere around 1 to 3 percent of your monthly income, especially if you're buying affordable term coverage.

That being said, we use the L.I.F.E. method.
L - Liabilities: debt, mortgage, credit cards, etc.
I - Income: 3 to 5 years of your annual income.
F - Final Expenses: funeral costs, medical bills, etc.
E - Education: Help fund your children's future schooling.

Tim Cassidy · Answer

Rule of thumb is 5 to 10% however if you want to use it as a tax-free retirement fund because of it's income growth potential, you can place 10 to 20% or more.

Mark Boone · Answer

That's really a tough question to answer from how much you should spend on premiums monthly. Spending is based on age, health, needs,etc will determine how much coverage you may need. If you are younger with a family, your needs may be greater, as we get older, our needs shift and we may not need as much coverage and then our ideas shift to not being a burden to our family from a final expense point of view or if we want to leave a legacy for our family or charity. The general rule of thumb when you are younger is a minimum of 8-10 times your annual income.

Answered by Mark Boone on August 13, 2026

Broker Licensed in MN, FL, MI, NC, SC & VA

Answered by Mark Boone Life Insurance Agent

Tamekia Mckinnie · Answer

Depending on what you’d like this policy to accomplish. There is a website called Lifehappens, and there the calculations of appropriate coverage levels are outlined based on needs, budgets, and expenses. Short answer: relative to the funeral, and to ensure the family is not displaced- it still has to be affordable. If you can’t pay or don’t pay, the insurance company won’t pay either, in accordance with the policy terms.

Answered by Tamekia Mckinnie on August 10, 2026

Agent Licensed in FL

Answered by Tamekia Mckinnie Life Insurance Agent

Chris Greenwood · Answer

5% is a good benchmark for what you should be putting into a meaningful and growing whole life policy. Term is more like an essential bill so the right amount for the cheapest price is the goal.

Daintee Hurst Dietz · Answer

That will depend on the reason and coverage outcomes you hope to achieve. I’d speak to your financial advisor about this.

How much of my monthly income should go toward life insurance premiums?

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How much of my monthly income should go toward life insurance premiums?

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Agent Locator

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A non-government resource website