Life insurance is one of those topics that people don't like to think or talk about. As a result, when they do have the conversation, they take the path of least resistance, looking for an easy calculation or recommended amount of coverage. Unfortunately, there's no one-size-fits-all answer, and if someone tells you otherwise, proceed with caution. The honest answer to how much coverage you need is everyone's least favorite answer--it depends. It depends on your income, who relies on that income, what you have for debt, and what your goals are.
The Quick Answer
While there is no simple catch-all answer, a solid starting point is 10 to 15 times your annual income. From there, you can adjust based on your outstanding debt, dependents, and available assets. This is a starting point, not a rule.
Why Income Multiples Aren't the Whole Story
Take, for example, a couple with one working partner and a partner who stays home with the children. On paper, the spouse at home might have a salary of "$0". 10-15x this amount doesn't tell us anything, but without them, there are childcare and other costs which must be accounted for.
The Middle Ground
Want a more accurate number than just a multiple? Try "LIFE" (Liabilities, Income, Final Expenses, and Education) or "DIME" (Debts, Income, Mortgage, and Education).
Liabilities/Debt - these are outstanding bills such as student loans, medical bills, credit cards, etc. These debts may not pass to spouses or other family members, but they can be first in line for any funds left in your estate.
Income - more accurately, income replacement. Who relies on your income, and for how long, would they need to replace that income before being able to survive on their own? In the case of a couple with a mortgage, it's likely loss of one income would put the other partner in a bad spot. Even if they immediately put the house on the market, there would be moving and other expenses which would need to be handled while down an income.
Final Expenses - according to Funeralocity, the average direct cremation (meaning no services, no memorial, no funeral--straight to the crematorium and returned in a bag with no urn) in Massachusetts is over $2,700. A full-service burial? Over $9,400 (as of August, 2026).
Education - with the cost of higher education climbing from semester to semester, if you have children, you may want to include funding for education expenses in your insurance plan.
A Practical Example
Take Marci (34) and Ricardo (38). Marci works part time as a Realtor, and brings home $35,000 a year. Ricardo works full-time and makes $65,000 a year. They have two children, 6 and 10. They bought a house two years ago, so they have 28 years remaining on their mortgage and owe $433,000. Their monthly mortgage is around $3,500. They each have a credit card, both have an average balance of $8,500. Marci's vehicle is a few payments away from being paid off, but she still owes about $2,200. Ricardo just purchased a new truck, and owes $12,000.
Marci sells a few homes a year, and stays home raising the children the rest of the time. Ricardo is a supervisor and works 50 hours a week on average. Because Marci's income fluxuates from month to month, some months have a tighter budget than others.
If something happened to Marci, Ricardo would need to secure childcare for the children to maintain his work schedule. In order to cover this additional expense, he would need to replace Marci's income for at least a few years, maybe longer. The average cost of a MA 4 year college is around $53,000/year. Assuming two children x 4 years each. Using the DIME method - For Marci D (2,200+8,500=10,700); I (35,000*6=210,000); M ($433,000); E ($53,000*8=424,000) = $1,077,700. We would then deduct any savings, investments, etc.
As you can see, using 10x income ($35,000 x 10 = $350,000) does not compare to the actual calculation. Don't get me wrong--having some life insurance is better than having none, but when you look at the impact, it quickly becomes clear why life insurance is so important.
Employer Coverage
Many people get 1-2x their salary through their employer. This is an excellent 'bonus' policy, but it is imperative that you secure coverage that you own and control. If your employer closes, or if you quit or get terminated, your coverage may or may not be portable or convertible.
Frequently Asked Questions
Can I have too much life insurance?
Yes and no. Over-insuring leads to higher premiums, which could be better used for short- and long-term investments. Additionally, consider a 20-year-old student who earns $30,000/year. If he applies for $5,000,000 in coverage, the underwriters will likely question why he needs so much insurance. On the flip side, life insurance can be used for wealth creation, leaving money to put your beneficiaries in a better position. I don't recommend over-insuring, but it can happen.
How often should I recheck this number?
While I would love to hear from clients at least annually to review their policies and insurance planning, I would suggest reaching out at least whenever you experience a life change--i.e., marriage, divorce, the birth of children/grandchildren, purchasing or selling a home, etc.
Is term or whole life insurance better for this?
They both have their place and it really depends upon your goals. Your insurance plan may include one, the other, or both. You also may layer coverage, having a term policy for 25 years to cover your remaining mortgage, but a 10 year policy to cover children's education, for instance. A trusted independent agent can sit down with you, go oveer your options, and help you decide what best fits your situation.
Still not sure if you need coverage? Take our quick, 2-minute quiz to get a personalized nudge, or reach out directly for a no-pressure conversation.