How much life insurance do you actually need?

"Ten times your income" is the most repeated number in life insurance and it is not derived from anything. It is a round figure that is easy to say. For some households it is far too much; for others it leaves a serious gap.

A better approach is to add up what the money is actually for.

Work out the four numbers

1. Debt that would not disappear. Mortgage balance, car loans, credit cards, private student loans. Federal student loans are generally discharged on death; private ones frequently are not, particularly with a co-signer.

2. Income replacement. Not your salary forever — your salary for the number of years your household would genuinely need it. If your youngest is four and you want coverage until they finish college, that is roughly 18 years. If your partner earns comparably and the children are grown, it may be two.

3. Costs that arrive because you died. Funeral and burial, medical bills, estate administration. Several thousand dollars at minimum, often considerably more.

4. Anything you intend to fund. College, a specific bequest, keeping a business running long enough to sell it properly.

Add those. Then subtract what already exists: current life insurance including employer coverage, savings, and other assets your family could actually use.

The remainder is roughly what you need to buy.

Watch employer coverage

Group life through work is a real benefit and it is usually not enough — often one or two times salary. More importantly, it is generally not portable. If you leave the job, it typically ends, and you will be older and possibly less healthy when you go to replace it.

It is worth treating employer coverage as a supplement to a policy you own, rather than as the policy.

Term length matters as much as amount

Coverage that expires before the need does is the more expensive mistake. If the mortgage has 22 years left, a 20-year term leaves a two-year gap at exactly the point when replacing coverage is hardest.

Check whether a term policy is convertible — many can be converted to permanent coverage without new underwriting, which is valuable precisely if your health changes.

Buying more is not free

Every dollar of death benefit has a premium attached, and a policy that gets canceled in year six because it was unaffordable protects nobody. The right number is the one that covers the actual need and that you will still be paying in fifteen years.

That balance is worth talking through with a licensed agent who can price several scenarios rather than a single one.