Since 1994
By the Termco teamLicensed life insurance agents since 1994Updated
Start with one question
Who would be hurt financially if you died tomorrow, and for how long? A spouse who'd lose your income, kids who'd need care for another 15 years, a co-signer on a loan, or parents you support. If no one depends on you, you may need little or no life insurance. If several people do, the number adds up quickly.
The quick rule of thumb
A common shortcut is 10 to 12 times your annual income. It's a reasonable sanity check, but it ignores your actual debts, how many kids you have and what you already own. The method below takes a few more minutes and gives a better answer.
Step by step (the "DIME" method)
- Debts: add up non-mortgage debts you wouldn't want to leave behind, such as car loans, credit cards, private student loans and personal loans, plus about $15,000 to $25,000 for funeral and final costs.
- Income: multiply the yearly income your family would need to replace by the number of years they'd need it. Until your youngest finishes school is a common choice.
- Mortgage: add the remaining balance, or enough to keep making payments, if you'd want your family to stay in the home.
- Education: add what you'd like to set aside for each child's education, if that's a goal.
Then subtract what's already there: savings and investments your family could use, existing life insurance (including group coverage at work, keeping in mind it usually ends if you leave the job), and any other resources.
A worked example
Consider a hypothetical couple, both 38, with two kids ages 4 and 7. One parent earns $85,000 a year.
| Item | Amount |
|---|---|
| Debts and final expenses (car loan, cards, funeral) | $40,000 |
| Income: $60,000 a year for 15 years (until the youngest is about 19) | $900,000 |
| Mortgage balance | $320,000 |
| Education: $50,000 per child | $100,000 |
| Total need | $1,360,000 |
| Minus savings the family could use | −$60,000 |
| Minus group life insurance at work (1x salary) | −$85,000 |
| Coverage gap | about $1.2 million |
That's more than many people expect, but term life makes it affordable. In Termco's estimate model, $1,000,000 of 20-year term for a healthy 38-year-old is $49.78–$65.65/mo for a man and $41.63–$54.64/mo for a woman. (Termco estimate, not an insurer quote.)
Don't forget the stay-at-home parent
A parent without a paycheck still provides childcare, transportation, cooking and household management. Replacing that work costs real money. Many families insure a stay-at-home parent for a meaningful amount, often several hundred thousand dollars, to cover childcare until the kids are older.
Match the term to the need
Your need shrinks over time: the mortgage gets paid down, the kids grow up, savings grow. That's why term life fits so well. Pick a term that covers your longest major obligation. Some people "ladder" two policies, such as a 30-year policy for the base amount plus a 20-year policy that covers the kids' years. See how to choose a term length.
When to revisit
Recheck your number when you marry, have a child, buy a home, change jobs or take on a big debt. It's often easier to add a second policy than to change an existing one.
Ready to see what your number costs? Get estimates in about a minute.
About the prices on this page. Every price shown is an example estimate from Termco's own pricing model, the same one behind our quote tool. It's calibrated to typical published term rates from insurers rated A- or better, but it is not a quote from any insurer, not an offer of insurance, and not a guarantee. Your actual rate depends on the insurer and its underwriting of your full application.
See estimates for your age and health
Eight quick questions, no account needed. A licensed Termco agent confirms your exact rate before you apply.
Frequently asked questions
How much life insurance should I get?
Enough to cover your debts, replace your income for as long as your family would need it, pay off or keep paying the mortgage, and fund goals like education, minus the savings and coverage you already have. A rough shortcut is 10 to 12 times your income.
Is life insurance through work enough?
Usually not on its own. Group coverage is often one or two times your salary, and it typically ends or becomes expensive if you leave the job. Many people use it as a supplement to their own policy.
Do I need life insurance if I'm single?
If no one depends on your income and you have no co-signed debts, you may need little coverage. Some single people buy a small policy for final expenses or to lock in a low rate before starting a family.
Should a stay-at-home parent have life insurance?
Often, yes. Replacing childcare and household work costs money. Many families insure a stay-at-home parent to cover those costs until the kids are older.
Related guides
- Can You Get Term Life Insurance Without a Medical Exam?
- What's the Best Term Length for Life Insurance? 10, 20 or 30 Years
- Term Life Insurance for Smokers: Rates, Vaping, Cigars and Quitting
- Converting Term Life Insurance to Permanent: How It Works
- Term life insurance by state
This page is general information, not medical, legal, tax or underwriting advice. Underwriting decisions are made by each insurer and vary by insurer and individual.