How much life insurance do you actually need?

The industry loves a shortcut: ten times your income. It’s easy to remember, easy to sell, and — for most families — either far too much or nowhere near enough. The honest answer isn’t a multiple. It’s a number, built from four inputs.

The four inputs

Every serious calculation, whether it’s a two-minute checkup or a two-hour meeting with a planner, comes back to the same four things.

• Income to replace. How many years of your take-home pay would your household need if you weren’t here? For most people with kids at home, the honest window is the years until the youngest is independent.
• Debt to retire. Mortgage, student loans, car loans, cards. Insurance can pay these off in a lump sum so your family isn’t servicing them out of a smaller budget.
• Education to fund. If college is a family value, price it out — even roughly — and add it in.
• Existing coverage to subtract. Group life through work, a small individual policy from years ago, spousal coverage. The gap is what you actually need to buy.

A concrete example

A 38-year-old parent, two kids (ages 6 and 9), $110k take-home, $280k mortgage, $12k car loan, $60k in group life through work. The youngest becomes independent in about fourteen years.

• Income replacement: $110k × 14 years = $1.54M
• Debt retirement: $280k + $12k = $292k
• Education (two kids, in-state public): $220k
• Less existing coverage: −$60k

That’s roughly $2M of new coverage. Very different from a lazy “10× income = $1.1M” answer, and different in a way that matters: the shortcut would leave the family paying a mortgage out of a shrinking income.

What tends to trip people up

Forgetting the stay-at-home partner. A parent who doesn’t earn a paycheck still produces $30k–$60k a year in childcare, household management, and logistics. That cost lands on the surviving parent if they’re gone.

Overweighting group life. Group life through work sounds substantial until you leave the job or the company cuts it. It’s worth counting, but treat it as bonus, not foundation.

Buying the wrong duration. A big number for too few years is a false comfort. Match the term to how long anyone actually depends on you — usually until the youngest graduates, plus a small buffer.

The short version

Add up the income you’d need to replace over the years anyone depends on you, plus the debts and future costs your family would face without you, and subtract what’s already in place. That’s your number. The checkup does this math for you in about two minutes and gives you a range, not a false-precision figure.