How Much Life Insurance Do You Actually Need
Skip the rules of thumb — calculate coverage based on the specific obligations your income supports.
Why rules of thumb fall short
'10 times your income' is a starting point, not an answer. It ignores debt, the number of years until dependents are independent, existing savings, and the cost of replacing services you provide (childcare, home labour).
The DIME method
Add up: Debts (mortgage, student loans, credit cards), Income replacement (annual income × years until dependents become independent), Mortgage payoff if not included in debts, Education (estimated cost for each child). That's your starting coverage target.
Subtract what you already have
From the DIME total, subtract: existing life insurance, retirement savings your family could access, and any other liquid assets. The remainder is the gap term insurance should fill.
Stay-at-home parent coverage
Easy to forget. Replacing childcare, transport, household management, and other services often justifies $250,000–$500,000 of coverage for a stay-at-home parent.
Reassess every few years
Coverage needs shift with mortgage payoff, children leaving home, and growing savings. Review every 3–5 years and after major life events.
Frequently asked questions
Is it cheaper to bundle policies?
Sometimes. Compare standalone quotes — bundling discounts are often smaller than rate differences between insurers.
What about supplemental work coverage?
Employer-sponsored coverage is usually limited (1–2× salary) and ends with the job. Treat it as a small add-on, not your main coverage.
When can I drop it?
When dependents are financially independent and your assets cover remaining obligations. For many people, that's around age 60–65.