How Much Term Life Insurance Do I Need?

UPDATED: Feb 28, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.

It doesn’t take algebra to determine your needs. It takes QuickQuote.

You may have heard you need a life insurance policy equal to 10 times your annual income. Or was it 20? The truth is, there’s no magical formula.

There are all kinds of life insurance calculators out there, but each one’s likely to give you a different answer. But it’s not hard to figure out how much life insurance you need. It simply takes some guidance.

Start With a Needs Analysis

The top reason people buy term life insurance is to replace income — to protect their families. You may have other reasons… to replace your income… plan for your business… pay estate taxes… or some combination of reasons.

To get an idea of the amount of life insurance you need, consider the following formula offered by the LIFE Foundation:

(Immediate Obligations + Future Income) – Existing Resources = Life Insurance Need

1. How much money will be needed to meet immediate obligations?
This includes medical bills, funeral costs, estate taxes, personal loans, business debts, mortgages, college funds for children, etc.

2. How much income is needed to support your family going forward?
This includes the total annual income your family would need and how long they would need that income to last.

3. What is the present value of your existing resources?
Think savings, investment accounts, retirement accounts, spouses’ income and existing life insurance.

Determine the Term

You can buy term life insurance for 10, 15, 20, 25 or 30 years. To determine which is best for you, answer the following:

  • How many years until my youngest child is no longer dependent?
  • How many years until my mortgage is paid off?
  • How many years until my spouse and I retire?
  • How many years until my other long-term obligations are met?


Write down your answers. They might look something like this:

12 years, 22 years, 12 years and 2 years

Use the largest number of years to select a policy for that time frame. A 25-year policy works best in our example. Another option is to layer multiple policies together to cover your needs. This approach could save you 25% or more on the cost of a single policy.

Nice Shortcuts

We offer these two simple ways to get started:

Ready to get started?

Your quotes are always free.