How Much Life Insurance Do You Need? | Coverage Guide

When you start thinking about buying life insurance, one of the first questions that comes up is, “How much coverage do I actually need?” Too little, and your loved ones could be left financially vulnerable. Too much, and you might pay more than necessary. The sweet spot is finding a policy that fully protects your family without straining your budget.

The Rule of Thumb

A common starting point is to aim for 10–15 times your annual income in coverage. This amount is designed to replace your income for enough years to give your family stability.

• If you make $60,000 per year, that could mean $600,000–$900,000 in coverage.

• This isn’t a magic number — it’s just a baseline to start from before factoring in your unique situation.

Key Factors That Affect How Much You Need

Your coverage should be tailored to your lifestyle, responsibilities, and goals. Here are the most important things to consider:

• Outstanding Debts – Mortgage, car loans, student loans, and credit cards should all be accounted for.

• Monthly Living Expenses – Utilities, groceries, transportation, childcare, and other essentials.

• Future Obligations – College tuition for kids, retirement savings for a spouse, or large future purchases.

• Final Expenses – Funeral costs, medical bills, and other end-of-life expenses.

Example Calculation

Let’s say you’re 40 years old, married with two children, and earning $60,000/year. You have:

• A $200,000 mortgage

• $15,000 in car loans

• $50,000 you’d like to set aside for each child’s college tuition

Calculation:

• Income replacement: $60,000 × 10 years = $600,000

• Mortgage payoff: $200,000

• Car loans: $15,000

• College savings: $100,000
  Total recommended coverage: $915,000

What Happens if You’re Underinsured?

If your coverage is too low, your family may struggle to:

• Stay in the same home

• Maintain their current lifestyle

• Avoid taking on additional debt

• Pay for college or retirement plans

Avoiding Over-insurance

While it’s tempting to “over-insure,” remember that higher coverage comes with higher premiums. You want protection, but you also want to ensure the policy is affordable for the long term.

The Best Way to Decide

An experienced agent can help you run the numbers based on your personal circumstances and shop multiple carriers for the best rates. That way, you’re not guessing — you’re choosing a plan with confidence.

📞 Need help calculating your coverage? Contact Imperial Insurance Team at (984) 296-4977 or info@imperialinsuranceteam.com for a free, no-obligation consultation.