How Much Life Insurance Do I Need?

Most people either guess or pick a round number. A better approach is to add up what your family would need, then subtract what you already have.

Step 1: Add up the needs

Think about what would have to be paid or replaced if your income stopped tomorrow.

• Your mortgage balance
• Other debts — car loans, lines of credit, credit cards
• Years of income your family would need
• Children's education
• Final expenses

Step 2: Subtract what you already have

Existing life insurance (including group coverage through work) and savings set aside for these needs reduce the gap.

Step 3: Review it with someone

An estimate is a starting point. A licensed advisor can help you test the assumptions — like how many years of income to replace — against your real situation.