Guide / Planning
How much life insurance do you need?
Estimate the financial gap your death would leave: future support and one-time costs, less resources genuinely available to meet them. A salary multiple is only a shortcut. Include unpaid care, the timing of expenses and any survivor benefits for which your family may qualify.
Give the estimate a purpose
List the people who rely on you and the expenses you want covered. Separate immediate costs from ongoing household support. Childcare or care for an older relative matters even if the person providing it earns no salary. Insurance Information Institute: How much life insurance do I need? explains why needs and resources are more useful than one universal income multiple.
Use a worksheet with four columns: expense, annual amount, years needed and available funding. Write the assumptions beside the numbers so another person can follow them.
A simplified example in USD
Suppose a household estimates a $30,000 annual support gap for 10 years, plus $100,000 of separate one-time obligations. It has $50,000 of savings specifically available for those needs. The simple calculation is $300,000 + $100,000 − $50,000 = $350,000.
This is an invented arithmetic example, not a recommended amount or a quote. It ignores inflation, investment returns, taxes and changing needs. Do not count a mortgage payoff and the same future mortgage payments twice. Do not subtract assets that survivors cannot reasonably use.
Check benefits separately
Social Security survivor benefits are monthly payments for eligible family members of workers who paid Social Security taxes. Eligibility depends on the family member’s circumstances and the worker’s record; it is not a universal replacement for income. Check Social Security Administration: Survivor benefits rather than assuming everyone receives the same amount.
Revisit the assumptions
Review the worksheet after a birth, separation, home purchase or major income change. Also ask what happens to any workplace coverage when employment ends. Take the completed worksheet to a licensed insurance professional; a useful discussion begins with the needs you are trying to fund, not the largest policy available.
Sources
- Insurance Information Institute: How much life insurance do I need?Accessed 2026-10-07
- Social Security Administration: Survivor benefitsAccessed 2026-10-07
Written by Sherpa Desk. General US information; not a personalized recommendation. No specialist review is claimed. Our editorial approach.
