How Much Life Insurance Do I Need?

“How much life insurance do I really need?” is an important question. Planning to meet the financial needs of your survivors is a fundamental step in creating a sound financial plan for you and your family. This step may require the purchase of a life insurance policy to ensure your family’s needs will continue to be met, even after your untimely death cuts your earnings potential short. Since life insurance needs are determined by a number of factors, our calculator can simplify the process.




Life insurance needs vary widely by person and are dependent on many factors, such as the number of dependents, expected final expenses, income and more. Making sure you have enough life insurance reduces the burden on your family and ensures you protect your loved ones when you’re gone.

When trying to figure out how much life insurance you need, you will want to:

  • Consider your dependents. Who relies on your income? If you have children, they may need help to pay for college, pay for everyday expenses and generally cover living costs. If you have an elderly family member, a dependent spouse or someone else who needs your income, life insurance is an important way to ensure they have money when you are no longer around.
  • Consider your expenses and contributions. Think about how much you contribute to the household and what household expenses are like. If you are the main earner, you will need a larger amount of life insurance to cover the costs of your income for at least a year.
  • Take a look at memorial and funeral costs. Final expenses, including final medical expenses and funeral costs, can add up to tens of thousands of dollars. Even a funeral can cost between $6,000 and $10,000. Life insurance can help defray some of the costs. Take a look at costs in your area as well as the type of memorial you might like to determine how much life insurance you need to set aside for this in addition to the amount of money you would like to have for income for dependents.
  • Consider the total financial situation of your household. If your household carries a lot of debt, you may need more insurance to cover repayments and to prevent distress. If you already have considerable savings and investments, some of these may help reduce the overall financial burden after a loss. If you don’t have a lot of liquid assets, life insurance can be a good way to ensure your family has cash in hand when they need it.
  • Think about how your situation may change. It is important to revisit your life insurance coverage regularly, as your needs will change. When you get married or have a child, example, you need to think about your family’s well-being and their protection when you are not around. If you start a business, you may need insurance to ensure your business can operate even without you. Carefully consider your dependents and what their financial situation will be like if you were suddenly gone. Use this as the basis to determine how much insurance you need.

Use the Money Help Center calculator to get a better sense of how much insurance you may need to protect your loved ones. This completely free calculator doesn’t ask for your e-mail or contact actress and isn’t trying to sell you anything. This free, no bias calculator is simply there to help.