How much life insurance do I need?

Life Insurance.  Let’s be honest it should be called “death insurance.” While no one jumps out of bed in the morning and says “Today I am going to talk about life insurance!” this is a discussion that needs to be had.  And you DO NOT have enough through your employer’s sponsored plan.  

Let us stop and take a quick assessment of your financial situation should you die today.  A little morbid but it’s a reality.  Your life can change in a matter of seconds.  You’ve seen the news stories. I have seen it many times while working as a Police Officer.  The tourist walking down the sidewalk being struck by a car from behind.  A rollover collision with an entrapment that catches fire. Stray gunfire.  Slip and fall while cleaning the gutters.

The acronym LIFE is a good starting place when there are kids, spouses or dependent parents involved. (And if you are single you still need to read this post)

L – Liabilities/Loans Outstanding

I –  Income Annually required until kids are high school graduates

F – Funeral Expense

E – Education College/Vocational 

Grab a piece of paper and get to work.  


Sum of your mortgage, family credit card debt, school loans, car loans.  There is enough stress after a death.  Have a life insurance policy to pay these off.  Write this number down.


Now that you’ve paid off the Loans/Liabilities, how much does your family need annually to maintain a similar standard of living until your children are out of high school. Your death will be stressful for the family.  Don’t presume your spouse will continue working or start working.  Your kids may need a full-time parent and here is your chance to plan right. Take your annual income needed multiplied by years until your youngest child is a high school graduate.  Write this down.

Side note – if you want to nerd out you can calculate into this equation the necessary income your family will need to keep up with inflation between today’s wages and those in the number of years until your youngest graduates.


How big of a celebration do you want?  During a time of grieving family members will overspend.  Your funeral could be as inexpensive as a few thousand dollars to twenty-five thousand dollars or more.  Write this number down.

Side note, you can preplan your funeral and reduce the stress on family members should you die. This will be a future blog post.


How much – that a good question.  Current 2019 one-year California tuition, books and housing is estimated at $20,500 per year and has been increasing at a historic rate of 5% annually.  Let’s presume your kid pursues a four-year degree.  Using 2019 dollars that is $82000 not including rising tuition.  

Has your spouse expressed an interest in return to college?  What about if your kid wants to be a rocket scientist or nurse?  Do you need to plan a little extra?  Now is your time.

Write this down.


Add them up. So what’s your number?

Now how much life insurance do you currently have in place?  Standard employer benefit usually doesn’t exceed $50,000.  Yes that is fifty-thousand.  Call HR your Department today and ask.  

What about your 401/403/457 plans.  Do you have enough in there to hit the LIFE number?

If you do, congrats; you still need some life insurance. Your 401/403/457 can change in a blink – remember 2008? If you’re short, or don’t want to risk your family being short money, read on.


So here is a LIFE scenario – 35 year old (dob 4/1/86) male in good health/BMI/qualifies for “preferred rating”, married two kids two and eight, living in Sacramento area. Currently this subject earns $65,000 per year.

Loans – $675,000

Income – $1,040,000

Funeral –      $25,000

Education – $164,000 


LIFE Total    $1,904,000                    

For simplicity I will round up to $2 million dollars of needed coverage.  This will leave a little extra for cost of living increases.

For this scenario I would recommend at a minimum a 20 year, $2 million dollar policy which will cost about three dollars a day.  Yes $3 per day.  A 20 year policy will help this family be covered until the children are grown and should something happen when his second child is in college there still is more than enough money to make sure college can be completed and his family is taken care of. 

For reference here is a screenshot of the quote page.  

Next step is identifying which insurance company will be the best for you. Insurance companies are not all the same. Having a knowledgeable agent makes a difference, saves you time and helps you start coverage sooner.

Give me a call at 530-322-5400 or submit a request for a quote below.