There is no single number that fits every family, but there is a straightforward way to estimate a reasonable amount. The goal is to cover what your loved ones would still need if your income or support disappeared.
A simple starting framework
- Add the income you want to replace, often several years of take-home pay.
- Add remaining debts, such as a mortgage, car loans, or credit balances.
- Add future costs you want to fund, like childcare or education.
- Add expected final expenses, such as a funeral or medical bills.
- Subtract savings, existing life insurance, and other resources.
The result is a rough target. It is a starting point for a conversation, not a precise prescription, because everyone's priorities and resources differ.
Common mistakes to avoid
- Only counting a salary and forgetting the value of unpaid work like childcare.
- Overlooking debts that would fall to a spouse or co-signer.
- Assuming employer coverage is enough; it is often modest and tied to the job.
- Buying a round number without connecting it to real needs.
Coverage amount and type work together
Once you have a target amount, the next question is what type fits: term for temporary needs, permanent for lifelong ones. The amount and the type are easier to decide together.
If the math feels overwhelming, that is normal. Charlie can walk through these questions with you so the number reflects your actual family, not a formula.