Why the amount matters
Too little coverage can leave your family short. Too much can strain your budget. The goal is an amount that covers what your family would actually need, at a premium you can keep paying.
A simple formula
Start with what your family would need, then subtract what’s already available:
- Income replacement: annual income × years your family would need it
- Debts: mortgage, car loans, credit cards
- Future goals: education and other plans
- Final expenses: funeral and related costs
- Minus: existing life insurance and savings set aside for your family
An example
Suppose someone earns $60,000 and wants to replace 10 years of income ($600,000). They have a $180,000 mortgage and $15,000 of other debt, and want $50,000 for education and $15,000 for final expenses. That’s $860,000. With $10,000 in savings set aside, the estimate is about $850,000. This is a hypothetical example for illustration only.
Common mistakes
- Relying only on coverage through work, which may end if you change jobs
- Forgetting a stay-at-home parent’s economic value
- Ignoring how long the need lasts (which affects term length)
- Buying once and never reviewing as life changes
Next steps
Use our coverage calculator for your own estimate, then talk with an advisor about the type of coverage that fits.
FAQs
Is 10 times income enough?
It’s a common rule of thumb, but your debts, goals and existing coverage may point to a different number.
Should both spouses have coverage?
Often, yes — including a spouse who doesn’t earn income, since replacing childcare and household work costs money.