How much life insurance do you actually need?
The useful way to size life insurance is not a multiple of income; it is the total of the obligations you want covered if you are gone, minus what you already have.
How much life insurance you need depends on your obligations, not a rule of thumb: the income you want to replace, the debt you want cleared, and the goals you want funded, less the assets and coverage you already have. Two people with the same income can need very different amounts.
A simple way to think about it
Add up what would need money if your income stopped, then subtract what is already there.
- Income to replace for the years it is needed
- Debt you want cleared, including a mortgage
- Goals to fund, such as education
- Minus existing savings, assets, and coverage in force
Term versus permanent
Term covers a defined need for a defined period at lower cost; permanent coverage lasts for life and can serve estate and business purposes. The right mix follows the obligations, not a sales pitch. Any guarantee is subject to the carrier's claims-paying ability.
Common questions
Is a multiple of income good enough?
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