How much life insurance do I need?

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If you were suddenly gone, would your partner have enough money to help pay the bills, help pay the mortgage, or help pay for your children’s education? When you’re choosing the amount of term life insurance that you need, think about your family’s needs now, and in the future.

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Affordable life insurance

When you have decided that you want to buy life insurance and you need to figure out how much life insurance you should buy, start by considering these common guidelines¹:

Consider starting with 10x your income

While you don’t know the future and you can’t foresee every possible expense your family might face in your absence, there are a few ways to help estimate your number:Some financial representatives calculate the amount using the Human Life Value philosophy, which is your lifetime income potential - what you’re earning now, and what you expect to earn in the future. In its simplest form the philosophy suggests that you multiply your income by a variable based on factors such as age, occupation, projected working years, current benefits, etc.

As with every individual the amount of insurance you should purchase depends on many factors but a simple way to get that one number is to multiply your salary times 30 if you are between ages 18 and 40. The calculation changes based on your age group so refer to the list below for your age group.

Age Maximum Life Insurance

  • 18-40 30 times income

  • 41-50 20 times income

  • 51-60 15 times income

  • 61-65 10 times income

  • 66-70 1 times net worth

  • 71-80 1/2 times net worth

  • 81+ case by case

While Human Life Value is one way of calculating the life insurance amount, there are other ways worth noting, so keep reading to learn more.

DIME is another guideline that many adhere to when considering life insurance. The DIME formula typically encourages you to look more at the actual expenses of your life to figure out an approximate amount of money that could help take care of those expenses, inclusive of:

  • Debts and final expenses: If you died tomorrow how much money would it take to pay off all the debts that you currently have and to pay for a funeral and other final expenses? You can figure that out by adding up all of your current debts like your cars and credit cards. Then think about what type of funeral you’d want and how much that would cost along with miscellaneous fees and other final expenses that your family would have to pay.

  • Income: How many working years do you think you would have left ideally? 10 years, 20 years, or more? Multiplying your annual income now by the amount of years that you would plan to be working. Add on some extra money to account for inflation.

  • Mortgage: If you currently own a home, factor into your decision the amount of money it would take to pay off the mortgage. If you don’t own a home, factor in what it would cost for your partner to buy a home in your current area without a mortgage and add that to the total amount.

  • Education: Figure out what college tuition and expenses cost for each child that you have right now, and then add some extra to that to account for inflation. Add the costs of college tuition and fees, living expenses, and miscellaneous expenses for each child to all the other expenses that you have been totaling up. .

Is life insurance worth it?

No one likes thinking about dying. But when you have a partner and a family you have to think about what would happen to them if you weren’t around to help out financially. Life insurance can be the responsible way to make sure that your family will be taken care of if something happens to you. It’s not just the cost-of-living expenses for the future that your family will need to pay for, they will also need to pay for your final expenses. Depending on the state you live in the cost for end-of-life medical care, funeral, and other expenses can top an average of $18,000 depending on the state you live, among other factors². Life insurance can help give your family the financial support to help them focus on grieving and rebuilding their lives without the financial burden of paying final expenses.

Life insurance payout

When it’s time for your beneficiary to claim your life insurance payout, the procedure is relatively straightforward. The person that you name as your beneficiary can claim the death benefit after your death.

In order to get the life insurance payout, typically your beneficiary will need your death certificate and the policy number or a copy of the actual policy. They may also need to supply some other documentation, depending on the terms of the policy and the requirements of the company that issues the policy. Your beneficiary then needs to submit all the documents to the insurance company. The insurance company will process the claim and issue a payment in accordance with the terms of the policy³.

Usually, your beneficiary may have two choices when it comes to getting the payment. They can choose to take the payment as a lump sum or they can choose to have it paid as an annuity. If they choose to have an annuity, a set amount of money will be paid to the beneficiary monthly until the term of the term policy expires⁴.

Term life insurance meaning & Insights

By now, you know that the answer to the question “Is life insurance worth it?” may often be yes. We know that choosing life insurance can be difficult. Our library of resources has helpful information on things like term life insurance meaning or term insurance vs. whole life insurance and insights and tips to help you make an informed decision when purchasing life insurance. The more information you have about the benefits of term life insurance and whole life insurance, the easier it may be to make the choice for your family.

* All life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.

** All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.

*** Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice. Guardian assumes no responsibility for non-Guardian products or services. Guardian, its affiliates & subsidiaries do not provide tax/legal/medical advice.

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.


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  1., (August 2021), last accessed September 2021

  2., (May 2021), last accessed September 2021

  3., (March 2021), last accessed September 2021

  4. All life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company