Guide
How much life insurance do you need?
A formula and the logic behind it: years of income, remaining debts, educational costs and current resources.
A common method adds up what your income would have covered and subtracts what's already in place. While not exact, the answer doesn't need precision: term policies come in round amounts, and the target is adequate protection during the key years.
Coverage estimate
Calculation method: annual income × number of years + outstanding debts + education funds − existing coverage, rounded to the nearest $5,000. It serves as your starting estimate, not advice.
Why those inputs
Years of income needed. The typical approach covers ten to twenty years; what's right depends on when your family would no longer require your income. In Merced, families with young children tend toward the longer timeframe because expenses for care, housing, and schooling are highest all at once.
Outstanding balances. The largest debt for most people is a home loan. Coverage sufficient to pay it off in full gives your family flexibility to decide their own future instead of being forced by financial pressure.
Educational funding. A basic allowance per child, in today's values. It's more practical to include this now than to buy additional protection later.
Assets you own. Cash savings that could be used, along with group insurance from your workplace. Workplace group benefits usually stop when you leave, so many families only count a portion of them.
Once you settle on an amount, the quoting tool lets you view costs for 10, 15, 20, 25, and 30-year options across all carriers. Purchasing more than your initial estimate is common because the monthly cost is minimal when younger.