How much life insurance do I need?

While there are common coverage amounts — like $250,000, $500,000 and $1 million — the amount of coverage you need boils down to your financial obligations and how much you’re willing to pay in premiums. Ideally, your payout will cover living expenses and outstanding debt for your loved ones, but it’s important to choose a policy you can comfortably afford now.

Find out how to do the math based on your budget and income.

How much life insurance do I need?

Your life insurance coverage should be enough for loved ones to pay for current everyday expenses, plus any future needs like college, medical bills and funeral costs.

The best way to figure out the exact coverage amount is to think through all your expected expenses, then subtract any savings or other income your loved ones will have. Some experts recommend this rule of thumb: Get coverage equal to 10 times your annual income. So if you make $50,000, you’d buy $500,000 in life insurance as income replacement for 10 years.

But this general rule doesn’t factor in debts, future raises or inflation. It also may leave out important financial needs that aren’t considered when multiplying by a flat number, says the Insurance Information Institute.

How do I calculate how much life insurance I need?

Select Start to enter your details and calculate how much coverage you need in less than three minutes.

How much life insurance can I afford?

To figure out how much life insurance you can afford, look at your monthly income versus your monthly expenses.

It’s important to choose a policy with premiums that stay within your leftover income. That way you can keep up with the payments — and keep your coverage. For example, the average cost of a $250,000 term life policy for a nonsmoking 30-year-old is $160 a year or $13 a month, according to Finder’s analysis of rates across 14 life insurance companies.

7 factors that affect how much life insurance you need

When you’re figuring out how much life insurance coverage to buy, these factors may weigh into your decision:

1. Your dependents

If you have loved ones who rely on your income, consider the expenses you pay for now and anticipate any future costs.

• Spouse or partner. Consider your partner’s age, health and lifestyle, plus how many years both of you have until retirement. If your partner brings an income, you may not need as much coverage.
• Children. Consider boosting your coverage if you have kids or are planning to have kids.
• Other dependents. Consider whether aging parents or other relatives could get by without you or your income.
• Pets. You can set up a beneficiary and caretaker for your pet and leave some of your death benefit to cover pet care.

2. Existing debt

Not all debts die with you — some get paid off by your estate or transferred to your parents or partner, according to the Consumer Financial Protection Bureau. Factor individually owned and co-signed loans into your insurance coverage, like a mortgage or credit card debt.

3. Current expenses

Consider your family’s daily living expenses, covering bills like your mortgage, utilities, groceries, car and home insurance.

4. Future expenses

• Education plans. Factor in future college or private school costs, like tuition, boarding and books. The average cost of a four-year college is $27,357 a year, according to the National Center for Education Statistics.
• Long-term care. Think through any medical or nursing home expenses you’re covering for parents or aging family members and include them in your life insurance policy. The cost of long-term care often falls in the $4,000 to $8,000 range per month, according to the US Department of Health & Human Services.
• End-of-life expenses. To ease your family’s stress after you die, you can add enough coverage to pay funeral costs. Funerals can cost over $7,000, according to the National Funeral Directors Association.

5. Business ownership

A life insurance policy can give your company and its executives and employees financial security if you die prematurely.

6. Leaving a legacy

You can buy higher coverage than your loved ones need for expenses to give them a financial safety net when you’re gone. Then, they can maintain or enhance their lifestyle, or even set up a charity in your name.

7. Other financial plans

When you’re calculating the coverage you need, subtract any existing savings in your savings accounts, 401k, 529 plan or other savings and investments.

Compare life insurance companies

Compare policies and prices from major insurers side-by-side to find the best possible deal.

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Name	Product	Issue age	Minimum Coverage	Maximum Coverage	Term Lengths	Medical Exam Required
Bestow		18 - 60 years old	$50,000	$1,500,000	10, 15, 20, 25, 30 years	No	Get a quote in less than 10 minutes with on-the-spot approval and no medical exam.	Go to site More Info	Compare	loading Fetching your data...
Haven Life		18 - 64 years old	$100,000	$3,000,000	10, 15, 20, or 30 years	No exams for some applicants	Fill out a quick online application and get approval in minutes with up to $3 million in coverage.	Go to site More Info	Compare	loading Fetching your data...
Sproutt		18 - 100 years old	$50,000	$10,000,000	5, 10, 15, 20, 25 and 30 years	No	Compare 40+ insurers and apply online to get the lowest possible price — no medical exam required.	Go to site More Info	Compare	loading Fetching your data...
Ladder		20 - 60 years old	$100,000	$8,000,000	10, 15, 20, 25 or 30 years	Depends on policy	Apply for term life insurance online without the medical exam. Get an instant decision and adjust your coverage at no charge.	Go to site More Info	Compare	loading Fetching your data...
Policygenius		18 - 85 years old	$50,000	$10,000,000	10, 15, 20, 25, 30 years	Depends on provider and policy	Compare 12+ top insurers side-by-side to get the best possible deal, and shop return of premium policies online.	Go to site More Info	Compare	loading Fetching your data...
Nationwide life insurance		40 - 95 years old	$10,000	$1,000,000	10, 15, 20 and 30 years	Yes	Get term, whole, universal or no-exam life insurance with up to $1 million in coverage.	Go to site More Info	Compare	loading Fetching your data...
Fabric		21 - 60 years old	$100,000	$5,000,000	10, 15, or 20 years	Depends on policy	No-exam term policies up to $1 million online, with the option to upgrade to permanent life insurance later.	Go to site More Info	Compare	loading Fetching your data...

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What if I can’t afford the coverage level I need?

If you come up with a coverage amount that you can’t afford, consider these options to lower the cost of your life insurance premiums:

• Ladder policies. Stacking policies could lower your rate. You may buy a $300,000, 30-year term policy to fit your mortgage, plus a $200,000, 20-year term policy to cover your kids’ education.
• Buy what you can afford now. You can get another term policy later that satisfies larger coverage needs. But your quotes rise as you age.
• Start healthy habits. Improving your health can score a much lower rate. If you’re improving your health, you might wait to buy until you score higher on the medical exam.
• Skip add-ons. You could delete any policy riders to lower your monthly premium.
• Avoid policies with under 10-year terms or $50,000 in coverage, which cost more for the coverage. Opt for the lowest standard coverage offered, like a $100,000, 10-year term.

Who doesn’t need life insurance?

If these scenarios apply to you, you may not need life insurance right now:

• You don’t have anyone relying on your income. The primary purpose of life insurance is to replace your income when you die. If you don’t have anyone relying on your paycheck, like a spouse, child or pets, you may be able to hold off on buying a policy. But if you think your situation may change in the future, it could be worth locking in a low premium while you’re young and healthy.
• You don’t have any debt or major assets. Many people buy policies to cover their outstanding debts and protect their assets — such as a house — when they die. If you haven’t accumulated any assets or debt yet, you may not need life insurance.
• You’ve built up enough money from savings and investments. If you have sufficient savings, healthy retirement accounts and solid investments, you may be able to self-insure. This means your loved ones would be able to cover their living expenses and financial needs using the accounts and liquid assets you already have.
• You have group life insurance with plenty of coverage. Group insurance policies are offered by employers, and they’re typically limited to small amounts like $100,000. If you do the math and discover your financial obligations come to less than that, you may have sufficient life insurance through your workplace.

Bottom line

Personalize your coverage level based on your financial obligations and the premiums you can afford. Then, compare life insurance companies to find the best possible policy for your budget.

Common questions about life insurance coverage

• Do term life insurance premiums increase over time?

  Usually, no. Most term life insurance policies have level premiums, which means you’ll pay the same amount each month or year.

• Can I change my life insurance coverage?

  It depends on the company. Some insurers let you adjust your coverage, so double-check with yours before purchasing a policy.

• Can I assign the death benefit to my estate instead of a person?

  Technically, you can. But the proceeds of your policy might be subject to probate — the official proving of your will.