How much life insurance do I need?
Insurance
A common starting framework is enough term life insurance to replace lost income through dependent years, cover outstanding debt, and fund major future obligations like education.
Term vs permanent
For most working-age households, term life insurance handles the income-replacement need at low cost. Permanent insurance is sometimes used for specific estate or business situations, but is overprescribed in many cases.
Sizing the policy
A common method: replace income for the years dependents need it, plus debt, plus major future expenses (education, etc.), minus existing assets that would already cover the gap.
Layering
Multiple smaller policies that step down over time often cost less than one large 30-year policy and can match the actual shape of need.
What people often get wrong
- Buying permanent insurance as a default
- Under-insuring on a stay-at-home parent
- Ignoring group coverage limits and portability
What to think about next
- Calculate the income-replacement need in years and dollars.
- Compare to current coverage including group policies.
- Get quotes for level term policies that match your actual need shape.
When to consider working with a CFP®
Working with a CFP® can help when these decisions feel intertwined, taxes, investments, cash flow, and life goals tend to move together, and a planning relationship can offer structure, prioritization, and accountability over time.
Frequently Asked Questions
Do I still need life insurance after 60?
Often less or none, if assets and pensions can cover obligations. The need typically declines as financial independence approaches.
Talk to a CFP® who works with high earners.
Connect with a CFP® to help you navigate this decision and build a comprehensive financial strategy.
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