How Much Life Insurance Do I Actually Need?

It’s the most common question we get, and the most common reason people stall out: how much life insurance do I actually need? Too little and you’ve left a gap. Too much and you’re paying for coverage your family won’t use.

The good news is you don’t need a spreadsheet or a finance degree. Here’s a straightforward way to think about it.

Start with what you’re replacing

Life insurance fills the financial hole left if your income or your work disappears. So add up what that hole would actually be:

1. Income replacement. A common starting point is your annual income times the number of years your family would need support. Many families use 7–10 years; younger families with small kids often go higher.
2. The mortgage and major debts. Add what it would take to pay off your home and clear shared debts so your family isn’t carrying them alone. (This is the core idea behind mortgage protection.)
3. Final expenses. Set aside enough for a funeral, burial or cremation, and any medical bills — so that cost never lands on the people you love.
4. Future goals. If you want to help fund your kids’ education or leave a head start, add that in.

Add those up, then subtract what you already have — savings, and any coverage through work. What’s left is a realistic target.

A quick example

Say someone earns $60,000, wants 10 years of income replacement, has a $200,000 mortgage, and wants $15,000 set aside for final expenses:

• Income: $60,000 × 10 = $600,000
• Mortgage: $200,000
• Final expenses: $15,000
• Target: ~$815,000, minus existing savings and any work coverage.

That number can look big at first — but for healthy people buying term life at a younger age, large coverage amounts are often more affordable than expected. The exact price is set by the carrier and depends on your age, health, and the policy.

Don’t forget the non-earner

If one partner stays home, it’s easy to assume they don’t need coverage. But replacing childcare, household management, and everything else they do has a very real cost. Many families insure both partners for exactly that reason.

A few honest cautions

• More isn’t automatically better. The goal is the right amount, not the biggest policy. We’ll tell you if you’re over-insuring.
• Your number changes over time. A new baby, a new home, or paying off the mortgage all shift the math. It’s worth revisiting every few years.
• This is general education, not financial advice. Your situation is unique, and that’s exactly what a real conversation is for.

The easiest way to get your number

You can run the math above yourself, or you can let us do it with you in a few minutes. As an independent agency, we’ll help you land on an honest figure and then compare options across multiple carriers to fit it — with no pressure and no obligation.

Get a free quote and we’ll help you find your number.