The risks of not having enough life insurance coverage

Having enough life insurance is important to protect your beneficiaries’ financial health.

Headshot of Policygenius editor Nupur Gambhir


Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

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Expert reviewed

This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

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Maria Filindras

Maria Filindras

Financial Advisor

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

Updated|3 min read

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Life insurance is meant to protect your family’s financial security when you die. But having just any life insurance policy doesn’t cut it. A policy that doesn’t have enough coverage or a too-short term length won’t serve its purpose of supporting your family.

Finding the sweet spot between the right amount of life insurance coverage and term length makes all the difference when it comes to securing your family’s financial security. Policygenius agents can help you find the right policy for your needs at the lowest possible price.

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Why having enough life insurance is important

It’s not just important to have life insurance, it’s also important to have the right amount of life insurance. But unfortunately, a majority of Americans are underinsured. According to Policygenius research, about 75% of people who have an active policy don’t have enough coverage, whether that be term length or death benefit amount. That, coupled with the fact that four in 10 households would not be able to pay for everyday living expenses if a primary breadwinner died, [1] indicates how important it is to leave behind a sufficient life insurance policy.


The consequences of a life insurance policy that doesn’t offer adequate support can be devastating for your family. Here’s what could happen if you don’t have enough life insurance:

Inability to keep up with everyday expenses

You want your life insurance policy to provide for your family’s basic needs. Not having enough coverage means your family could lose the ability to cover everyday expenses. 

Inability to keep up with long-term expenses

Not having enough life insurance means your family might not be able to cover long-term expenses, like their retirement. Below are some of the average costs that someone might see in Ohio, which has a cost of living that is 11.1% less than the national average. [2]

Even with a below-average cost of living, you would need at least a $1 million life insurance policy to ensure your family’s financial health for 10 years after you die.

Inability to pay for final expenses

End-of-life expenses are costly and cost $7,000 on average — sometimes even upwards of $10,000. While you want to ensure you’re leaving behind enough of a life insurance coverage amount to compensate for the loss of your income, a low coverage amount might be prohibitive when your family plans and pays for your funeral.

Debts and assets might be seized

Mortgages, loans, and any other financial liabilities you have impact how much life insurance coverage you’ll need — especially if you have any loans that have been co-signed. If you die and your life insurance policy doesn’t offer enough of a coverage amount to pay off your debts, your co-signers will be liable for the remaining debts. 

Even if you are the only borrower on a loan, not having enough life insurance to cover your debts can have major repercussions. Outstanding debts have to be sorted out in a probate court. If your estate doesn’t have enough money to pay off the debt, the court could sell your belongings — which could include the house that your dependents live in and/or impact any other part of your estate they rely on.

How to make sure you have enough coverage

The best way to protect your family’s financial health if you pass away is, of course, to purchase the right policy with enough coverage. There are a few key steps you can take: 

Get a death benefit that is 10 to 15 times your income 

If you’re considering getting a $250,000 policy for the cheaper premiums, it may not offer the type of financial support your family needs based on your income. If you make $200,000 a year, then a lump sum payout of $250,000 would only last your beneficiaries a little over a year, not accounting for inflation and unexpected expenses. Generally speaking, our experts recommend 10 to 15 times your income in life insurance coverage.

Additionally, your policy should anticipate how long your family’s expenses need to be covered. For example, if you have a 30-year mortgage and a 20-year life insurance policy, your dependents may either end up paying your debts or losing part of your estate to a debt collector.

Frequently asked questions

Why is it important to get life insurance?

Getting life insurance is important because it protects your family’s financial security if you die.

What are the consequences of not having enough life insurance?

If you don’t have enough life insurance, your family may not be able to afford everyday expenses and they could be liable for your debts.

How do you know how much life insurance to get?

Most people need 10 to 15 times their income in life insurance coverage, and the term length should match your longest financial obligation. Speak with a Policygenius agent for free to figure out how much life insurance you need.