Guide
How much life insurance do you need?
Use this to walk through the thinking: how many working years your family would need your income, what you owe, what education might cost, and what you have in the bank or through work.
A straightforward approach is to total what your salary would have supported throughout the working years, then subtract what you have already saved and any group coverage through your employer. The calculation does not have to be exact because term policies are sold in standard increments, and the target is simply a number large enough to sustain your family through the period when your income matters most.
Coverage estimate
Estimate = (monthly or annual income × working years) + outstanding debts + education funding − existing savings and group insurance, rounded to the nearest $5,000. This is a rough framework, not professional financial guidance.
Why those inputs
Income years. Financial advisors typically suggest that coverage replaces income for ten to twenty years, depending on how long the people who depend on you would need that support. Palo Alto families with young children frequently pick the higher end of that range, since the combined expenses of care, housing, and education all rise sharply during those years.
Debts. For most households, the home loan is the single largest obligation. Including enough coverage to pay it off in full leaves your survivors free to make choices about their home based on their needs and preferences, not on immediate financial pressure.
Education. Set aside an allowance for each child's schooling, using current dollars and prices. It is simpler and cheaper to buy sufficient coverage once than to purchase another policy afterwards.
What you have. Subtract any cash savings that could be used and any group insurance provided by your employer. Group coverage typically ends when employment ends, so it is prudent to count only a portion of it or leave it out entirely.
Once you have decided on a death benefit amount, the quote tool will show you what that level of coverage costs from multiple carriers for 10-, 15-, 20-, 25-, and 30-year terms. Many people choose a slightly higher amount than their initial calculation suggests, since the monthly cost premium for extra coverage is often modest when you are younger.