I’m a financial adviser with $2.5 million of term life insurance. I know it seems like a lot, but there are 3 reasons I think it’s just right.

Jeff Rose. Courtesy Jeff Rose

When I was in my 20s and first starting my career, I wasn’t sure how much life insurance I should buy. Fortunately, I was smart enough to purchase $US250,000 in coverage after I got married and then add $US500,000 more in term life insurance coverage after we had our first child.

Eventually though, we had a few more kids and I started to realise the coverage I had wasn’t enough. At that point, I purchased another 30-year term policy for $US1.5 million dollars for a grand total of $US2.25 million.

The fact that I own a few businesses, including one that sells life insurance, definitely played a role in my decision. Not only do I know a lot about life insurance as a product, but I also have access to some tools that help people figure out how much insurance to buy based on their income, their household expenses, and more.

Those tools even helped guide me to a major life insurance purchasing decision recently. Sometime last year, I played around with a life insurance quote generator on my website and realised I could consolidate my life insurance coverage and save some cash. That revelation ended with me purchasing a $US2.5 million term policy with a 30-year term and saving over $US400 per year. Score!

That probably seems like a lot of life insurance, and it is, but I have reason to believe I made the right decision. Here are some of the factors I considered when I purchased the life insurance policies I currently have, as well as some reasons you may want to buy more coverage for your own family.

Reason 1: I have 4 kids

While there are many reasons to purchase life insurance, having children is one of the most important. When you have kids to provide for, it’s crucial to make sure your spouse or partner will have income coming in once you’re gone. A term life insurance policy is a great way to guarantee that, no matter what happens to you, your partner won’t be left trying to figure out how to pay bills while also mourning your loss.

My wife and I adopted a fourth child a few years ago, which means I have four mouths to feed and four kids who will likely go to college. Having $US2.5 million in term life insurance coverage means that, if the worst-case scenario comes true, my wife will be able to care for our children as we always have without having to worry about money. I don’t want to them to have to change their lifestyle if I’m gone and having life insurance means they wouldn’t need to.

Reason 2: I don’t think 10 times my income is enough

While most people try to purchase 10 times their income in life insurance coverage, even that much may be insufficient if you have several children or a lot of debts and liabilities. Let’s say you earn $US80,000 per year and have five small children, for example. Do you really believe $US800,000 in life insurance would replace your income until your kids reach adulthood and help pay for school activities, college tuition, healthcare, and everything else they need? Probably not.

I bought a considerable amount of coverage because I have a high income and don’t want my family to have to make budget cuts if I’m gone. No matter your income, I suggest you think long and hard about how much money your family might miss out on if you were gone from their lives during your peak earning years. It may be more than you think – especially if you have young kids.

Reason 3: Term life insurance is inexpensive

Here’s another reason I bought $US2.5 million dollars in life insurance coverage: It’s cheap. If you’re relatively young and healthy, you can easily get hundreds of thousands of dollars in coverage for less than a dinner out with friends each month. (See also: I got a $US1 million dollar life insurance policy at 28, and now that I have a family I don’t regret it for a minute)

While you can buy different types of life insurance, including whole life, term life insurance is always the best value in terms of the amount of coverage you receive. And really, most people would be better off with a high-dollar term life insurance policy instead of whole life. That’s a fact no matter what life insurance salesman have to say.

Not only is term life insurance inexpensive, but it’s easier than ever to buy online. Some online providers even offer instant policies without a health exam, meaning you can apply today and have coverage tomorrow.

Since term life insurance is so affordable and easy to access, there’s no excuse to go without and put your family’s future at risk. Term coverage is so cheap, in fact, that it’s easy to buy more coverage than you think you need just to get some extra peace of mind. If you don’t have life insurance yet or you know you don’t have enough, the time to shop around for life insurance quotes is now.

Policygenius can help you compare life insurance policies to find the right coverage for you »