Depending on the reason you are applying for life insurance, there are several ways to determine the amount of coverage you need. Family income protection is one of the main reasons people apply for life insurance. In order to assess your life insurance need, the insurer will need to know your age and income at the time of the application.

One simple and common method is to calculate coverage as a multiple of annual income. Remember that your income means your TOTAL income, which may include more than just salary – bonuses, commissions, deferred compensation – but NOT investment income.

A good place to start is this formula: