Guide
How much life insurance do you need?
Evaluate your coverage needs using both a calculator and a straightforward framework: years of income needed, outstanding debts, education expenses and existing assets.
The standard calculation involves totaling what your income provides and deducting existing resources. It won't be exact, and frankly it doesn't have to be: term protection is sold in standard amounts anyway, and the objective is a figure that keeps your household on solid ground during the years that count.
Coverage estimate
Calculation formula: (annual income × years of need) + debts + estimated education costs − current assets, then round to the nearest $5,000. This estimate is just a starting reference point and should not be taken as specific guidance.
Why those inputs
Income duration. Financial advisors typically recommend that coverage last between ten and twenty years based on how many years your dependents might be financially vulnerable. In the Davis area, many families with young children lean toward the longer timeframe since expenses for childcare, housing costs and school fees often rise simultaneously.
Outstanding debts. For many households, a home mortgage represents the single biggest liability. Setting coverage equal to your loan balance means your family could choose their living situation rather than having that decision made by financial constraints.
Education expenses. Budget an approximate amount per child in current dollars. Handling education funding now through your insurance plan is often easier than purchasing additional coverage down the road.
Current resources. Gather information about liquid savings and workplace-provided coverage. Keep in mind that employer insurance typically goes away when employment ends, so you might want to factor in only a portion of it.
Once you've determined a target amount, the quote tool displays the monthly cost for coverage lengths between 10 and 30 years from multiple insurers. It's not unusual for people to purchase coverage slightly above their estimate because the monthly premium increase is modest when you're younger.