How Much Life Insurance Do You Need?

Life insurance exists to answer one question: if you died tomorrow, would the people who depend on your income be okay? If no one relies on your paycheck, you may not need it at all. If people do, this guide shows how much to buy and which kind.

Who actually needs life insurance

You need it if someone would suffer financially without your income — a spouse, children, or anyone who shares your debts. Single people with no dependents and no co-signed debt usually don't. The point isn't to insure a life; it's to replace the money that life provides.

How much coverage to buy

A common rule of thumb is 10–12 times your annual income, but a better approach adds up what you'd actually need to cover: replacing income for the years your family depends on it, paying off the mortgage and other debts, funding future needs like college, and a final-expenses cushion — minus savings you already have.

Term vs. whole life

Term insurance covers you for a set period (say, 20 or 30 years) and is cheap because it's pure protection. Whole life lasts forever and builds cash value, but costs many times more. For the vast majority of families, term insurance sized to the years of dependency — plus investing the difference — is the right answer.

When to buy and review

Buy when someone starts depending on you — a marriage, a mortgage, a first child — because term premiums rise with age and health issues. Revisit your coverage after major life changes, and let the policy expire once the kids are grown, the mortgage is gone, and your savings can stand on their own.

Estimate your gap

Use the net worth calculator below to tally your assets and debts, which is the starting point for sizing coverage: the more you've already built, the less insurance you need to fill the gap. Insurance is temporary scaffolding while you build the wealth that eventually makes it unnecessary.