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Can you have too much life insurance?

Jul 20, 2020 3 Minute Read

When it comes to life insurance, is there such a thing as too much protection?

Life insurance is a crucial part of many families’ financial plans. You want to make sure you buy enough life insurance to keep your loved ones covered, but not so much that you’re paying for more than you need. So how much is too much life insurance? Here’s one way to help determine how much coverage may be right for you.

How much life insurance do I need?

Life insurance is there to help your family stay afloat financially if something happens to you. But can you have too much life insurance? To find out how much insurance coverage you need, factor in all of your current and future expenses, including day-to-day expenses, mortgage, debts, student loans, college expenses, funeral costs, and leaving a legacy.

Make sure to think about what’s coming down the road. If you’re planning on having more kids or upgrading your starter home, you’ll want to make sure that your policy is large enough to cover those increased expenses later.

You should also factor in any savings or other assets. The difference between your savings and your expenses is the amount of life insurance you want to consider. The ideal number is different for everyone – check out our insurance calculator for a personalized estimate.

Is there such a thing as too much life insurance?

Most people tend to be underinsured, rather than over-insured. According to a recent industry study, 43% of people say they either don’t have enough life insurance or aren’t sure if they have enough. Being underinsured can cause big financial issues for your family down the road: The same survey found that 44% of people would feel the financial effects within six months if the family’s primary wage earner died.

While having enough insurance is the main concern for most families, there’s no point in buying too much life insurance and paying for what you may not need.

If you’re buying term life insurance, which is typically the way to go for most families, you’ll want to think about both your coverage amount and term length, which affects the overall price of your policy. Key factors to consider when buying term life insurance include:

  • Your age and your children’s ages:  Once your children are grown and no longer relying on your income, you may not need as much coverage. Keep that in mind when choosing a term length. If your kids are 14 and 16 years old, for example, you may not need a 30-year life insurance policy.
  • Time left on your mortgage: Your mortgage is most likely your biggest debt. If you only have 10 years left to go on your mortgage, you may not need a 20- or 30-year policy.

It’s important to review your policy regularly to make sure it’s still covering what it needs to cover. In some cases, you might actually need more coverage. But other life changes can mean that you no longer need as much life insurance as you initially purchased.

If you’ve unexpectedly outgrown your coverage, make sure to call your insurer or agent. They will let you know if you can decrease your life insurance coverage and, if so, which restrictions might apply. They can also tell you how your premiums might change.

Still have questions?

That’s what we’re here for. eFinancial works with top-rated companies to help you find the right coverage for you and your family. Give us a call or start your quote online today.


At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.