How Much Life Insurance Do I Need?

A Stewardship Way to Count

"How much life insurance do I need?" is the question I hear most. The honest answer is that it depends on your family. But there is a simple way to count.

Before we start, Take the 60-second Family Protection Checkup. In about a minute it points out where your family may have gaps, and then this post will make more sense.

Count it like a steward

"By wisdom a house is built, and by understanding it is established; by knowledge the rooms are filled with all precious and pleasant riches." (Proverbs 24:3 to 4)

Wisdom means knowing what your family would actually need. Here are the pieces.

1. Replace your income for a season

How many years would your family need support while they adjust, finish school or rebuild? Many people consider several years of income. Most people prefer to have anywhere from 8 years to 12 years of income replacement. Let's say your household earns $100,000, each breadwinner would need at least $1,000,000 total insurance coverage because the whole household relies on that income.

2. Debts

Mortgage, car, credit cards, loans. What would your family owe if you were not here? Read more about mortgage life insurance options as well as debt settlement options.

3. Children and their future

Think about childcare, school and the years until they are on their own. I (the founder of Top Financial Agency) became widowed when our twins were 11.5 months old. When you're a single parent you become both the breadwinner and the caretaker of the kids. You'll definitely need help like childcare or even meal delivery services while you get back on your feet.

4. Final costs

Funeral and final expenses can arrive in days. They are one of the first bills a family faces.

5. What you already have

Subtract savings and any coverage you already own, including work coverage that may end if you leave the job. I've met with clients who thought they were properly insured, but instead were underinsured because they were relying on the income from their jobs. Also, most of the time when you leave from one job to another you may lose the coverage you have with your current job.

This is not a formula

Every family is different. This is a way to start the conversation. I do not guarantee any amount is right for you until we look at your whole picture.

Your next step

Review what you have with a policy review, read more about life insurance, or Take the 60-second Family Protection Checkup. I am a life insurance agent in Chino Hills, California, happy to help families nationwide.