How much cover you actually need
"Ten times your income" is a sales heuristic. It is fast, it is roughly the right order of magnitude for a lot of people, and it has no relationship to your actual situation.
The number you need is the gap between what your household would owe and want, and what it would have. Working that out takes about fifteen minutes and a piece of paper, and it is the single most useful thing you can do before applying for anything.
The arithmetic
Add up four things, then subtract one.
1. What has to be paid off
Mortgage balance. Car loans. Credit cards. Student debt — federal loans usually discharge on death, most private loans do not, so check which you have. Any business debt you have personally guaranteed.
This is the easiest number to get exactly right, and it is usually the largest single component.
2. Income your household would lose
This is where most calculations go wrong, in both directions.
Do not use your gross salary. Use what your household would actually need to replace — your take-home pay, minus what you personally consume. A surviving spouse does not need to fund your commute or your share of the groceries.
Then decide how many years. Not "forever". Until the youngest child finishes education, or until the surviving partner reaches their own retirement provision, whichever is the real cliff edge in your household.
A useful sanity check: if the payout were invested conservatively, would the income it throws off plus the survivor's own earnings cover the shortfall? A rough real return of 3–4% is a defensible planning assumption; anything above that is optimism doing structural work.
3. What still has to be paid for
Childcare, if the surviving partner would have to buy what you currently provide. This routinely runs to tens of thousands a year and is the most commonly omitted item on the list — particularly for a non-earning partner, whose economic contribution is invisible in an income-multiple calculation and substantial in reality.
Education, if you intend to fund it. Use the real cost of the institutions likely to be in play rather than a national average.
4. Final costs
Funeral and burial, any medical costs not covered by insurance, estate administration, and any tax due. For most households this is a five-figure number rather than a six-figure one, and it is what final expense policies exist to cover on their own.
Then subtract what you already have
Existing individual policies. Group cover through your employer — and read the next section before counting it at face value. Liquid savings and investments that would actually be available, which is not the same as your retirement balance. Social Security survivor benefits, which are real money and are routinely ignored.
What is left is your number.
The group cover trap
Most people already hold some life insurance through work and count it as solved. Two problems.
It is usually small — one or two times salary is typical, which rarely closes a mortgage.
And it is not yours. It ends when the job ends, at exactly the moment your household can least absorb the loss, and by then you may be older or less insurable than you are today. Whether you can take it with you depends on the conversion right in the policy, which has a deadline most people discover after it has passed. Our page on group conversion covers the mechanics.
Count group cover, but count it as temporary.
How long, not just how much
Two numbers decide the term.
When does the need end? The year the mortgage is paid, the youngest child is independent, or the surviving partner's own retirement provision takes over. That is your horizon. Buying a 30-year term when the need ends in 14 is paying for cover you have already decided you will not need.
When does the price change? Life insurance is priced on age and health at the point of application, and both generally move against you. The cheapest policy you will ever be offered is the one you apply for today.
Those two pull in opposite directions, which is why laddering exists: a larger policy over a shorter term to cover the mortgage years, and a smaller one over a longer term for the tail. Two policies, sized to two different needs, frequently costing less in total than one policy sized to the larger need for the longer period.
Common ways this goes wrong
Insuring only the earner. If a non-earning partner's death would force you to buy childcare, that is a real financial exposure and it belongs in the calculation.
Buying to a premium instead of to a need. Deciding you can afford $40 a month and taking whatever that buys is backwards. Work out the need first; if it is unaffordable, shorten the term rather than shrinking the cover, because a smaller policy that pays out during the years of maximum exposure beats a larger one you cancel in year three.
Forgetting inflation. A number that closes the gap today will not in twenty years. Either size up modestly or accept that the later years are partially covered.
Never revisiting it. A new mortgage, a child, a divorce, a business, or a salary that has doubled all change the answer. This is a calculation to redo every few years, not once.
What this means for your application
The number you land on determines which product route makes sense, and this is where it connects to the rest of the site.
Larger amounts — several hundred thousand and up — generally need accelerated underwriting or a underwriting">fully underwritten application. Both can be done without an exam, and our page on no-exam life insurance explains which is which.
Smaller amounts, particularly for final costs, are what final expense and simplified issue products are built for, and applying for a $500,000 policy through a route capped at $50,000 wastes weeks.
Whether the cover should be term or permanent is a separate question from how much, and it is worked through on term versus whole life.
What to do next
Do the arithmetic before you get a quote, not after. Four numbers added, one subtracted, on paper. It takes fifteen minutes and it is the difference between buying a policy and buying the right policy.
Then check the term against the year your need actually ends, and consider whether two policies at different lengths beat one.
When you have a number and a term, the quote request form takes both.
Questions we get asked
Is ten times income ever right? It lands in a reasonable range for a mid-career earner with young children and a mortgage, which is why it survives as a rule of thumb. It is badly wrong for someone with no dependants and no debt, and badly wrong in the other direction for a high earner with four children and a large mortgage.
Should I include my retirement savings as an offset? Only the part that would genuinely be available and would genuinely be spent on the gap. Money earmarked for a surviving partner's own retirement is not available to replace your income — counting it twice is the most common error in a needs analysis.
Do I need cover if I have no dependants? Usually much less, and sometimes none. The cases that still justify it are co-signed debt someone else would inherit, a business partner or buy-sell agreement, an estate liability, or wanting to cover your own final costs rather than leaving them to family.
What about Social Security survivor benefits? Real, and worth checking rather than guessing. A surviving spouse caring for a child under 16, and the children themselves, may qualify. Get your figure from your own Social Security statement rather than an estimate, then subtract it.
Should I buy more than I need in case things change? Buying a little headroom is reasonable, since applying again later costs more and may not be possible. Buying substantially more "just in case" is paying today for a need you have not identified. Laddering handles this better than oversizing.
My employer gives me two times salary. Is that enough? Almost never on its own, and it stops when the job does. Treat it as a useful layer rather than a plan.