Dianne Williams, MBA

Certified Retirement Counselor®

Since 1983 in the financial services and investment industry


Retirement Pathways, Inc.

4965 U.S. Highway 42, Suite 1000

Louisville, KY 40222


Phone:  502-797-1258 




May/June 2019

How Much Life Insurance Do You Need?

If you have loved ones, you likely understand the importance of life insurance. Choosing the appropriate type of life insurance for your situation is important but choosing the appropriate amount may be the most crucial decision you make.

Rules of Thumb
There are generally two ways financial consumers figure their potential life insurance needs. One way is to simply multiply estimated annual income by a factor, usually between six- and 12-times income. These formulas are not exact but offer an easy way to calculate income replacement.

Customize It
A more exact way to figure out your needs is to use projections. Take your annual income and subtract income that would replace it, such as a spouse working and Social Security benefits. Subtract this added income from your current income to find the annual deficit. Or figure your expenses, especially large ones including a mortgage, childcare and college costs, and then subtract your replacement income from them for your annual net expense.

Multiply the projected annual income deficit or the annual net expense by the number of years you need to make up the shortfall, and you’ll have a better idea how much you need.


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* Securities offered through American Equity Investment Corporation. Member FINRA/SIPC. 4222 Grant Line Road, New Albany, IN 47150. Investment advisory services offered through American Capital Management, an SEC Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Equity Investment Corporations and American Capital Management.

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