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How much life insurance do you need?

You need a coverage amount that can help your loved ones cover your main financial obligations in your absence at a cost that’s affordable for you. Our calculator can help you do the math and determine how much coverage is right for you.

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By

Katherine MurbachEditor & Licensed Life Insurance AgentKatherine Murbach is an editor and a former licensed life insurance agent at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.&Tory CrowleyAssociate Editor & Licensed Life Insurance AgentTory Crowley is an associate editor and a former licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Edited by

Antonio Ruiz-CamachoAntonio Ruiz-CamachoAssociate Content DirectorAntonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.
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Reviewed by

Patrick Hanzel, CFP®Patrick Hanzel, CFP®Certified Financial Planner™ & Advanced Planning ManagerPatrick Hanzel, CFP®, is a certified financial planner and advanced planning manager at Policygenius. His expertise has been featured at Lifehacker, Consumer Affairs, Authority Magazine, Thrive Global, and Fatherly.

Updated|4 min read

Expert reviewedExpert reviewedThis article has been reviewed by a member of ourFinancial Review Council to ensure all sources, statistics, and claims meet the highest standard for accurate and unbiased advice.Learn more about oureditorial review process.

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How much life insurance do you need?

Date of birth

Age is one of the many factors that determines your life insurance rates.

Your total annual salary and/or earnings, before taxes.


Do you have a spouse or partner?

We can recommend a coverage amount for your partner, too.


We'll take the number and ages of your children into account when calculating your coverage.


Include all debts, such as mortgages, student loans, car loans, credit cards, etc.

Your total household liquid savings (i.e. the funds are accessible without taxes or other penalties whenever you need them).

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Recommended coverage for you

Optimal coverage

The most comprehensive level of protection to replace your lost income.

Your term

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Your coverage

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These estimates are for educational purposes only and shouldn't take the place of professional advice. Your coverage needs may vary based on other factors not considered here. Interested in more personalized quotes? Compare for free online, or call 1-855-695-2255 to speak with one of our licensed agents.


Your term

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Your coverage

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Your life insurance coverage should be large enough to allow your family to carry on with minimal financial impact after you’re gone. 

Experts suggest your coverage should be 10 to 15 times your income, but the actual amount will depend on your unique needs — for example, if you have a mortgage to pay or young children to raise, or if you only need enough funds to cover end-of-life expenses.

What’s the easiest way to calculate how much life insurance you need? 

Here’s what you can do to calculate how much life insurance you need easily:

  1. Add up your current and future financial obligations — such as debt, everyday household expenses, and childcare.

  2. Subtract your liquid assets — such as any savings and retirement accounts. 

  3. That’s it. The result is the amount of coverage you’ll need.

You can also use our coverage calculator, located at the top of this page. 

  1. You’ll provide a few pieces of personal information, including your age and gender.

  2. You’ll enter some details about your household finances, such as your annual income, total debt, and savings.

  3. That’s it — we’ll calculate your life insurance needs for you.

Once you know the amount of coverage you need, a Policygenius agent can help you explore the best policy for you at the most affordable price.

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Other ways to manually calculate how much life insurance you need

1. Multiply income by 10

One common rule of thumb is that your coverage should be roughly 10 to 15 times your annual income. So for example, if you make $100,000 per year, you likely need at least $1 million in life insurance coverage.

2. Multiply income by 10, plus $100,000 per child

If you have children, there’s a slight variation to that rule. Multiply your income by at least 10 (and up to 15), then add an extra $100,000 per child to account for each child’s education. This calculation, however, doesn’t include any existing assets, like 529 plans.

3. The DIME formula

In this method — which stands for Debts, Income, Mortgage, and Education — you tally up the following:

  • Outstanding debts 

  • Your income multiplied by the number of years your family will depend on it

  • The amount left on your mortgage 

  • The cost of your children’s education

Your tally of your outstanding debts, separate from your mortgage, should include co-signed debt like car loans and student loans that your co-signer would become responsible for when you die. You can also include personal debt that might be taken out of your savings, like credit card debt.

You should also factor in income growth and the number of working years you have left.

4. Shortfall calculation

In this method you start by deciding the annual income you’d like to leave your beneficiaries and multiply it for the number of years you calculate they’ll need financial support. 

Next, subtract from that amount other financial assets available to your beneficiaries in your absence, including savings, current and future gains on investment and retirement accounts, Social Security, and any salaries earned by your dependents. 

The result is the shortfall you’ll need to cover through a life insurance policy.

Ready to shop for life insurance?

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4 tips for getting the life insurance you need & saving money

The length and coverage amount of the policy you pick will determine your life insurance costs. That’s why it’s also important to find the right type of coverage at the most affordable rate — the cheaper your rate, the more coverage you’ll be able to afford.

These tips will help you find the right life insurance coverage for you at the best price.

1. Determine the type of life insurance you need

Do you need coverage for life or only for a set period of time? Are you considering life insurance just to provide a financial safety net to your loved ones, or are you also interested in using it as an investment tool? Your answers will determine the right type of life insurance for you — and your life insurance quote. 

  • Term life insurance is one of the most affordable life insurance coverage options on the market, only lasts for a set term — usually between 10 and 30 years — and doesn’t come with any complex tax implications or restrictions. Term life is the best option for most people looking to protect their income and provide their family with a financial safety net to cover any debts — including a mortgage or any other types of personal loans.

  • Whole life insurance and other types of permanent life insurance are good options for high-net-worth individuals who are interested in using life insurance to diversify their investment portfolio, or people with long-term financial obligations or coverage needs, like dependents who require lifelong care. Whole life never expires and comes with a cash value that earns interest in addition to the death benefit payout. Because of that, it’s usually significantly more expensive than traditional term life policies. If you’re already maximizing your contributions to tax-advantaged accounts like a Roth IRA or a 401(k) and are seeking another investment option, whole life might work for you.

  • Final expense insurance is also a type of permanent life insurance, but it’s designed to cover end-of-life costs like funeral expenses. Coverage amounts are low — usually up to $50,000 — an premiums can be comparatively more expensive than term life’s. You usually have to be at least age 45 to qualify, but if you’re not eligible for traditional coverage due to health or age reasons, final expense can be an option for you.

2. Buy term life for the most affordable policies

If you’re considering life insurance to cover everyday expenses and any financial obligations your family would be responsible for in your absence, a term life policy can be an affordable coverage option for you. Term life insurance is much cheaper than whole life insurance.

For example, a healthy 35-year-old would pay $24 per month for a 20-year term life insurance policy with a $500,000 payout. The same person would have to pay around $526 per month for a whole life insurance policy with the same death benefit — over 20 times more.

Comparing term life vs. whole life insurance

Features

Term life insurance

Whole life insurance

Permanent coverage

No — maximum of 30 to 40 years

Yes

Cost* ($500,000 coverage amount)

$26/month for a 20-year term

$440/month

Guaranteed death benefit payout

Yes

Yes

Guaranteed cash value

No

Yes

Premium cost stays fixed

Yes, in most cases

Yes, in most cases

Pays annual dividends

No

Yes, in some cases

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*Methodology: Average monthly term life insurance rate is for male and female non-smokers with a Preferred health rating obtaining a 20-year, $500,000 policy. Term life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica. Average monthly whole life insurance rate is calculated for non-smokers in a Preferred health classification, obtaining a whole life insurance policy paid up at age 100 from MassMutual. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.

Cost comparison between 20-year term, 30-year term, and whole life insurance policies offered through Policygenius.

Learn more about the differences between term life and whole life insurance

3. Don’t wait to buy life insurance

Life insurance gets more expensive by 4.5% to 9% every year you age because we all become riskier to ensure as we become older. This means the sooner you buy life insurance, the cheaper your premiums will be.

For example, a healthy, non-smoking 25-year-old can expect to pay around $24 per month for a 20-year term life insurance policy with a $500,000 death benefit payout, according to the Policygenius Life Insurance Price Index. A healthy non-smoking 35-year-old would pay a bit more — around $29 per month — for the same coverage. But the life insurance premium for a healthy 45-year-old for the same coverage would more than double that amount — around $57 per month.

The earlier you buy life insurance, the higher your chances of locking in the lowest rates will be — potentially allowing you to afford the amount of coverage you need for less.

What happens if you outlive your life insurance policy?

4. Compare life insurance companies quickly & easily

Life insurance is federally regulated, so no insurer will be able to offer you any discounts. However, every life insurance company evaluates the risk factors that will determine your life insurance rate differently — including, your age, gender, lifestyle habits, and more importantly, your health.

Comparing life insurance quotes from multiple insurers is the best way to find the cheapest coverage option for you. And the best way to compare quotes is by working with an independent broker.

Independent brokers like Policygenius are not affiliated with any insurer and sell policies from multiple companies. At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.

Frequently asked questions

Is there a rule of thumb for how much life insurance you need?

A common rule of thumb is to multiply your annual income by 10 to 15 times to get a ballpark estimate of how much life insurance you need. If you have children, you can add $100,000 per child to that amount to account for their education.

How does the life insurance company you choose affect how much you’ll pay for your coverage?

Every life insurance company evaluates the factors that will ultimately determine your life insurance rates differently. This includes your age, gender, lifestyle habits, and more importantly, your health. Compare quotes from different insurers to find the company that offers you the most affordable rate for your particular profile and coverage needs.

How do you find the cheapest life insurance?

Working with an independent broker can help you compare quotes and offers to get you the cheapest life insurance coverage for your profile.

What type of life insurance do you need?

Term life insurance is best for most people, especially if you’re trying to protect your family against losing your income. If you’re a high-net-worth individual, have dependents who may require lifelong care, or just need a guaranteed death benefit for funeral expenses, a permanent life insurance policy may be a better fit for you.

Authors

Katherine Murbach is an editor and a former licensed life insurance agent at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.

Tory Crowley is an associate editor and a former licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Editor

Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

Expert reviewer

Patrick Hanzel, CFP®, is a certified financial planner and advanced planning manager at Policygenius. His expertise has been featured at Lifehacker, Consumer Affairs, Authority Magazine, Thrive Global, and Fatherly.

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