How much life insurance do you need?
How much life insurance you need typically depends on who relies on your income and what would still need to be paid if you were gone. A common approach adds up income to replace, debts and mortgage, children and education costs, and final expenses, then subtracts savings and coverage you already have. There is no single right number.
The honest answer is that it depends on who counts on you and what would still need to be paid if you were gone. There is no single right number, but there are clear, sensible ways to get close.
What goes into a life insurance estimate?
- Income replacement: the earnings your household relies on.
- Debts and mortgage: the balance on your home plus other loans.
- Children and education: the cost of raising kids and future schooling.
- Final expenses: funeral, burial, and any medical or estate costs.
- Business obligations: loans you have guaranteed or a share others would need to buy out.
Who needs it? New parents and growing families deciding on a first policy. Homeowners who want the mortgage covered so the family can stay put. Business owners with loans, partners, or a succession plan in mind.
Two common approaches. Income multiples is a quick rule of thumb that multiplies your annual income by a figure such as ten to twelve. The DIME method adds up Debt, Income, Mortgage, and Education for a more tailored number. Both are starting points; from there you can subtract savings and any coverage you already have to land on the gap that new coverage may need to fill.
How we help: We sit down with you, work through income replacement, debts, education, and final expenses, and translate it into a number that fits your situation. Then we explain the policy types that could meet it and help you request a quote.
Count group coverage separately, because it usually leaves with the job. Employer-provided life insurance is commonly one or two times salary and ends at termination, and any conversion right is time-limited. A figure that looks adequate while you are employed can fall away in the same month the income does. Work the number from what would still need paying, then treat group coverage as a supplement rather than the base.
