Skip to Main Navigation Skip to Main Content
Our Family of Companies
western & southern financial group
western & southern life
columbus life insurance company
eagle realty group
fort washington investment advisors
gerber life insurance
integrity life insurance company
lafayette life insurance company
national integrity life insurance company
touchstone investments
western & southern financial group distributors

How Much Life Insurance Do You Need?

Life Insurance
young woman conducts research on her laptop computer at home to determine her life insurance needs

Life insurance is one of those financial staples many people don't stop to think about. Its value often doesn't even register until the unexpected happens, such as the death of a family member.

One of the big reasons many people don't consider life insurance is that they may not understand how their financial needs translate into a life insurance policy. If you feel you have no idea how much life insurance coverage is right for you, you might try starting out with a few basic self-imposed questions and calculations.

What Are Your Life Insurance Needs?

While there's no set formula for determining a coverage amount for life insurance, calculating how much money you and your family might need to maintain your current lifestyle could help you get started.

This calculation could factor in your monthly expenses, mortgage or rent, debts, and savings and investment goals. Consider also taking into account homeownership, assets and liabilities, household makeup and, if you're married, whether you both work. If you're currently saving for things like retirement or your child's college education, consider adding those as expenses, too.

If one parent stays at home with the children, you may want to consider insuring both parents. That's because the stay-at-home parent's ability to care for the children would need to be replaced should the other pass unexpectedly.

Consider how many years of your salary would need to be replaced should something happen to you. For example, if you expect to need coverage for 10 years, multiply your current salary by 10. Then add any other obligations — like the potential costs of childcare — on top of that.

Remember: Because every family's needs are so different, there's no exact formula. A great place to start is with an online life insurance calculator — you can enter your income, the number of years your family will rely on that income, and the amount of any other coverage you currently have, and the calculator will provide you with an estimate of how much coverage you may need (there's a more advanced version available as well). This data can help you kick off a complimentary financial analysis with a financial representative, who can help you find a coverage amount that works for you.

Can You Change Your Life Insurance Policy?

Another potential reason many people may not consider life insurance is because their financial needs tend to change over time. A young couple with no children may feel they only need a life insurance policy for the purpose of protecting their income should one of them pass. This would mean they likely need to cover a salary and perhaps a mortgage, outstanding car payments or student loans.

Their feelings may change once they have a child, however, as they consider the additional costs that come with raising that child — basic expenses like food, as well as childcare and education (especially saving for college). As mentioned above, if one parent stays home to raise a child, they may need to be insured as well, since this would cover possible future childcare costs.

If a couple has adult children, their life insurance needs may shift to protecting their life savings and making sure certain expenses, such as funeral and burial costs, will be covered. They may even want enough coverage to pay off any debts that would be left behind. But they still may not need as much as a younger couple, especially if they're retired and therefore don't have to replace a salary.

What's the Bottom Line?

Everyone's financial situation is unique, which is why speaking with a financial representative is so important. He or she can help you determine your specific life insurance needs within your current stage of life.

When it comes to how much life insurance you need, a little calculation, some self-reflection and the help of a financial representative can help you determine the right coverage amount for you. For many, a life insurance policy can help provide additional peace of mind — and finding the right amount can help your family and other loved ones better handle the uncertainties of life.

Related Product
Life Insurance

Related Articles

Explore What Life Insurance Solutions May Be Right for You

Give us a call 866-832-7714 866-832-7714
Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.