How much term life insurance do I actually need?

"How much coverage do I need?" is usually the first real question people ask once they decide to look at term life. Online calculators throw a number at you. An agent might shrug and say "ten times your income." Neither of those is wrong, exactly. But they skip the part that actually matters: what is this money supposed to do?

Start with the job, not the number

A term life policy has one job: if you die during the term, it pays a lump sum to the people who counted on your paycheck. So the right amount of coverage is whatever it would take for them to keep going without you. That breaks into three pieces.

1. Replace your income

Add up your gross annual income and multiply by the number of years your family would still need that income. For a household where one parent is twelve years from the youngest child finishing college, twelve times salary is a reasonable starting point. For a couple in their forties with no children, five to seven years may be enough — it covers the runway to recover, retrain, and adjust.

Don't use take-home pay. Use gross. Your survivors will have new expenses (childcare, services you used to do, possibly therapy), so replacing the headline number is a more honest target than replacing the net.

2. Cover the debts that would follow them

Add the remaining mortgage balance. Add auto loans, student loans, and any credit card balance you wouldn't want a grieving spouse to inherit. Most term policies are set up so the death benefit can be used however the family chooses — paying off the mortgage in one move is often the right call, because it removes the single largest monthly bill.

3. Fund the futures you promised

If you have kids, add what you'd want to leave for their education. Public, in-state, four years is a defensible default ($80,000–$120,000 per child today, depending on the state). If you've already started a 529, subtract what's in there.

Subtract what's already covered

If you have a small group life policy through work (typically one or two times salary), subtract that. Most group policies don't follow you if you leave the job, so don't lean on them — but if you're shopping for term coverage today, count what you already have.

What the number usually looks like

For a 38-year-old earning $90,000 with a $300,000 mortgage, $20,000 in other debt, and two kids, the math lands somewhere around $1.4M of coverage. That tends to surprise people. It shouldn't. Term life is cheap precisely because most people never use it — so carriers can price a million-dollar policy for less than a streaming bundle.

A few honest caveats

Calculators are starting points, not final answers. Two households with identical income can need very different coverage if one has a spouse who could step back into a high-earning career and one doesn't. Health, age, and tobacco use all change the price more than the size of the policy does — going from $750K to $1M often costs less than people expect.

And: more coverage isn't automatically better. The right amount is the amount that lets your family stay where they are and do what they planned. Anything beyond that is a premium you're paying for peace of mind that nobody will ever spend.

Have questions about how much coverage you actually need? Talk to a licensed advisor.