How Much Life Insurance Do You Need?

It’s one of the first questions people ask about life insurance—and one of the hardest to answer with a simple rule of thumb. The right amount depends on what your family would need if your income and financial support were no longer there.

A helpful way to start is with a simple question:

If you died today, how much would your family need to maintain the life you’ve helped provide?

Most families think about several areas:

• Income: How many years of income or financial support would your spouse and children need?
• Debts: What obligations would need to be paid, such as a mortgage, farm or business loans, vehicles, or other debts?
• Future expenses: What costs matter to you, such as college, a child’s wedding, or helping aging parents?
• Final expenses: What would your family need for funeral and other end-of-life costs?
• Existing resources: What savings, investments, existing life insurance, or other assets are already available to help meet those needs?

From there, you can compare the resources already in place with the financial needs you want to address. The difference can provide a starting point for determining how much life insurance coverage to consider.

Your needs will change as children grow, debts are paid down, income changes, and savings build. Reviewing your coverage after a major life change—and periodically as your circumstances change—can help keep your protection aligned with the people and plans it is meant to serve.

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