How much life insurance do I need?

Your life insurance coverage should be about 10 to 15 times your income. Here’s how to determine the right amount to get based on your financial goals.

Amanda Shih author photoHeadshot of Policygenius editor Nupur Gambhir

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Amanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

&Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

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By

Patrick Hanzel, CFP®

Patrick Hanzel, CFP®

Certified Financial Planner™ & Advanced Planning Team Lead

Patrick Hanzel, CFP®, is a Certified Financial Planner™ and Advanced Planning Team Lead at Policygenius. His expertise has been featured at Lifehacker, Consumer Affairs, Authority Magazine, Thrive Global, and Fatherly.

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The amount of life insurance you get should be enough to replace your lost income and cover all of your family's future expenses, like mortgage payments and bills. But it's easy to undervalue your policy and get too little coverage.

For example, someone making $100,000 a year may think they only need $500,000 of life insurance. But in reality, that death benefit amount would only protect their family for five years. The key to protecting your family is to get enough life insurance to last them years down the line, so that their finances are never jeopardized.

Not sure how much life insurance you need? We’ve got you covered.

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How much life insurance coverage should you have?

Figuring out how much life insurance you need is pretty easy: just use the life insurance rule of thumb and calculate 10 to 15 times your income. This is the best way to account for inflation and household expenses, and to ensure that your beneficiaries have enough money for the long term. 

Why you should figure out how much life insurance you need

Figuring out how much life insurance you need before you get any life insurance quotes is the best way to get accurate estimates. Online quote tools default to common coverage amounts and term lengths, but the protection your family needs is unique. An average person might need a $500,000 policy, but if you have more debt or a higher salary, a quote tool could give you a lower cost estimate than is realistic and leave you surprised by your final premium later. 

Five ways to estimate how much life insurance you need

There are many different ways to estimate how much life insurance you should buy. Try a couple of methods and decide which works best for you. People with several financial responsibilities, like multiple loans and dependents, may benefit from a more detailed estimation like the DIME Method. If getting a quick and simple estimate is the priority, our life insurance calculator or multiplying your income will be faster, though slightly less accurate. If budget is your priority, the 1% income method will give you an affordable policy, though the payout may be a little lower than the ideal amount.

For everyone: Use our life insurance calculator

Not interested in doing the math? We get it — that's why we created a coverage calculator so you can easily figure out how much life insurance you need:

For a quick answer: Multiply your income by 10

One common rule of thumb is to multiply your annual income by at least 10 times (and up to 15 times) to get your estimated coverage amount. This is an easy way to make an estimate based on the number of years you want to financially support your family. In other words: How many years of your income would your family lose if you passed away today? 

Younger shoppers might want to multiply by a higher number, to account for all of your earning years and future income increases.

For more detailed estimates: The DIME Method

The DIME method requires you to gather up the most information, but you’ll get the most accurate estimate by using it. In this method, 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 debts, not counting 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.

As suggested above, remember to factor in income growth and the number of working years you have left.

For parents: Buy 10 times your income, plus $100,000 per child

Becoming a parent changes your lifestyle and your budget so, naturally, it changes your life insurance needs too. Parents can make a quick estimate by using the “multiply by 10” rule of thumb, then adding at least $100,000 for every child you have or plan to have. 

Remember to factor in future expenses you’d want to cover for a child too, like college tuition and extracurricular activities. If you or your partner will be a stay-at-home parent, that person should have their own policy that accounts for the work they do at home that would need to be replaced, like cooking, cleaning, errands, and childcare.

For the budget conscious: Use the 1% income rule

The 1% rule is simple: Choose a coverage amount that will get you premiums totaling about 1% of your annual income.

“It’s important to make sure that the policy you are purchasing is one that you can afford even on your worst day, month, or year,” says Patrick Hanzel, certified financial planner and advanced planning team lead at Policygenius. One percent is an amount most people can fit into their current budget without making other sacrifices. If affordability is your top priority, the 1% rule may be the right estimation method for you. 

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What is the minimum amount of life insurance you need?

You can buy as little as $5,000 of life insurance if you buy a burial insurance policy, whereas most term life insurers require you to have a benefit of $50,000 or more. Most of the term life insurance providers on the Policygenius marketplace have a coverage minimum of $100,000. 

But the smallest amount of coverage available isn’t the same as the minimum amount of protection you should have. At the lowest end, your life insurance policy should be able to support your dependents’ everyday needs for several years and cover your end-of-life expenses. You can potentially lower the benefit of the new policy you buy if you have significant savings or existing life insurance.

What if I don’t get enough coverage?

If you don’t buy enough coverage or your policy doesn’t last long enough, it can jeopardize your family’s financial health. A recent study found that 44% of people would suffer financially within six months if their family’s primary wage earner passed away, and 28% would see that impact within a month. [1]

Without enough life insurance to replace your income, your family may not be able to keep up with short- and long-term expenses. For example, if your policy doesn’t leave your family with enough money to make mortgage payments, they could fall behind and lose their housing.

The life insurance gender gap

Women are historically underinsured for life insurance compared to men, with just 47% of women owning a policy in 2021 compared to 58% of men. [2] A recent report from LIMRA, a financial services research, consulting, and professional development organization, found that 43% of women say they need or need more life insurance. A lack of knowledge, and specifically about how much coverage to buy, has a significant impact on this gap. [3] Eight in 10 women also overestimate the cost of a policy.

Anyone who contributes to your household should have insurance protection, regardless of gender. Using the estimation methods above are a great first step in making a confident decision about your own life insurance plan or confirming that you have the right amount of coverage. If you still have questions after making an estimate, an insurance or financial professional can talk you through your next steps.

→ Learn more about buying life insurance for women

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Who can I talk to about life insurance?

Figuring out how much coverage you need is an important decision, but all of the options and numbers can get overwhelming. Our licensed insurance agents can answer any questions you have about how to make a life insurance coverage estimate based on your finances.

Not ready to talk to an agent? Seek out a certified financial advisor or estate planning advisor that you trust. These professionals can walk you through different scenarios and options that make life insurance part of your long-term financial plan and ensure that you’re protecting what’s most important to you.

Next steps for buying life insurance

Now that you’ve figured out how much life insurance you need, you’re ready to shop around and find the best life insurance companies. Working with a Policygenius agent (for free) is the best way to get the right amount of coverage at the most competitive price. 

→ Learn more about how to buy life insurance

Frequently asked questions

How much life insurance should I buy?

Experts recommend that you get life insurance coverage that is at least 10 times your income. You may need more depending on your debts and whether you have children.

How do you determine how much life insurance you need?

Tally up your financial obligations and subtract your existing life insurance policies and liquid assets, such as your savings accounts.

When should I get life insurance?

Even if you don’t have an immediate need for life insurance, you should get coverage as soon as possible. The cost of life insurance increases as you age and your health worsens, so purchasing a policy while you're younger is the best way to lock in more coverage for less.

What is the rule of thumb for how much life insurance you need?

The common rule of thumb to estimate how much life insurance you need is to multiply your annual post-tax income by 10 to 30 times. This way, your family will get a benefit that can replace your income for at least a decade.

Is life insurance worth it if you’re single?

Life insurance is worth buying if you’re single if someone depends on your income. That includes any co-signed loans you currently pay, like student loans, which become your co-signer’s responsibility when you die.