How Much Life Insurance Do You Actually Need?

Insurance agents quote big round numbers because commissions scale with premium. Calculating your real need yourself usually saves money — and gives better coverage.

Calculators do the heavy lifting, but knowing what is going on underneath is what saves you money — or stress — later. Insurance agents quote big round numbers because commissions scale with premium. Calculating your real need yourself usually saves money — and gives better coverage.

The DIME framework

Debt + Income replacement + Mortgage + Education for kids. Add it up, that's your floor.

The 10–12× income shortcut

Quick rule for someone with kids and a mortgage. Tweak up for high-cost-of-living areas, down for households without dependents.

Term vs whole life

Term is cheap, simple, lasts your earning years. Whole life is expensive, slow-building cash value, usually only worth it for estate-tax planning.

When you don't need life insurance

No dependents, no co-signed debt, no business partners. Insurance protects others — if there's no 'other', skip it.

Pro tips

  • Lock in term coverage while you're healthy and young — rates triple after age 50.
  • Re-evaluate every 5 years or after every life change (marriage, kid, home, business).

Frequently asked questions

Should I cover my spouse if they don't work? Yes — replacing their unpaid labour (childcare, home management) costs serious money.

Is employer life insurance enough? Usually 1–2× salary. Way below what dependants actually need. Don't rely on it alone.

The math is the easy part. Acting on what it tells you is where the real win lives.

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