A year: your take-home pay
Until your youngest is grown up
Car loans, cards, student loans
That your family could use
Through work (often 1 or 2 times salary) or your own policy
More options· $10,000 final costs
In total, to set aside
A year, above inflation
Life cover you need
$875,000
Your family would need $875,000; you already have $20,000 in savings and cover.
- Income for 10 years
- $600,000
- Mortgage and debts
- $265,000
- You already have
- $20,000
What this means
Term life insurance for 10 years is usually the cheapest way to get this cover: it pays out if you die during the term, and costs less the younger and healthier you are when you buy it. Choose a term that lasts until your children are grown up or your mortgage is paid off.
If no one depends on your income, you may need little or no life cover. Cover for your income if you’re too ill to work is often more important, and more likely to be needed.
How it adds up
| Income for 10 years | $600,000 |
| Mortgage and other debts | $265,000 |
| Funeral and final costs | $10,000 |
| Your family would need | $875,000 |
| Less savings and investments | -$20,000 |
| Less cover you already have | $0 |
| Extra cover needed | $855,000 |
What the cover pays for
- Income for 10 years$600,000
- Mortgage and debts$265,000
- Final costs$10,000
Assumptions in this estimate
- Each year’s income is simply set aside, with any interest on it just keeping up with inflation.
- The amount is rounded up to a round figure, as policies are sold. It’s a starting point: a broker or adviser can look at your whole situation.
- Social Security may pay survivors benefits to your spouse and to children under 18, which would lower what you need. Your Social Security statement at ssa.gov shows what they could get.
- Life insurance payouts are generally free of federal income tax for the people who receive them.
- Cover through work usually ends when you leave the job, so it’s worth having some of your own.