How Much Life Insurance Do You Actually Need
A simple framework beats both guessing and over-relying on rules of thumb like '10x salary.'
Calculate need from obligations, not a generic income multiplier
Rules like '10x your salary' are a rough starting point, not a real answer. Your actual need depends on debts, dependents, and existing savings.
Why generic multipliers fall short
A '10x salary' rule ignores whether you have young children, a mortgage, existing savings, or a working spouse — all of which meaningfully change how much coverage you actually need. It's a starting point for conversation, not a number to commit to.
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A more accurate framework
Add up what your dependents would need covered: remaining mortgage and debt, years of income replacement until kids are financially independent, and future costs like education. Then subtract existing savings, investments, and any employer-provided life insurance. What's left is a reasonable coverage target.
Term vs. permanent, briefly
Term life insurance covers a fixed period at a much lower cost and fits most people's core need — replacing income during working and child-rearing years. Permanent policies (whole or universal life) cost significantly more and combine insurance with a savings component; they make sense for specific estate-planning situations more often than as a default choice.