![]() If one of you fills this role be sure to get life insurance for them as well as the bring-home-the-bacon parent. Plus, you’re not just looking to take care of your family’s immediate needs-you want to make sure their future needs are covered too.īut you’re not quite done, you’ll want to think through the situations below to figure out your final number.Īsk any stay-at-home parent and I’m pretty sure they’ll tell you while it’s a blessing, it’s also a ton of work. But like I mentioned earlier, that much term life insurance is actually pretty inexpensive for most people. It also allows you and your spouse time to build enough wealth to self-insure. That’s long enough to give the kids time to grow up and (fingers crossed) get out on their own (meaning they’re no longer dependent, they’re independent!). Likely, you’ll want a policy for 15–20 years. Term life insurance policies come in different terms-of 10, 15 and 20 years. Buying 10–12 times your salary in life insurance coverage guarantees that whatever else your family feels, they won’t feel a huge financial pinch when you’re gone. That gives your family a comfortable financial cushion while they grieve and recover from their loss. The growth of that investment alone could replace your salary for a long time. Why 10–12 times? Because if you die, your family can invest the payout from your life insurance in good growth stock mutual funds with an average return of 10–12%. (Personally, I’d be using the calculator because I’m a millennial and it would take too long to find a pen and paper in my house.) So if you make $50,000 a year, you should get a policy with a payout of at least $500,000. Whether you do this with a pen on paper or use our calculator above, take your income and multiply it by 10–12 times. While I’ll always recommend a term life policy, there are a lot of different factors that can push how much life insurance you need up or down. How to Calculate How Much Life Insurance You NeedĮverybody’s situation is a little different so it would be ridiculous of us to suggest that everybody should get the exact same life insurance policy.
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