How Much Life Insurance Do You Need as a Small Business Owner?

If you ask a traditional insurance salesman or retail financial planner how much life insurance you need, they will hand you a simple, generic formula. They will tell you to multiply your annual W-2 salary by ten or twelve, add your home mortgage balance, and purchase a policy for that total dollar figure. If you earn one hundred fifty thousand dollars a year and owe three hundred thousand dollars on your mortgage, they will recommend a two-million-dollar term policy and call it a day. For a W-2 employee, that basic math might be sufficient. For a small business owner generating millions of dollars in corporate revenue, that generic formula is dangerously flawed.