Common methods: 10x annual income rule (simple but imprecise), DIME method (Debt + Income replacement + Mortgage + Education = coverage needed), Human Life Value (future earnings potential).

Example calculation: $100k income × 10 years = $1M, OR Debts $50k + Mortgage $300k + College $200k (2 kids) + 10 years income $1M = $1.55M total need.

Subtract existing assets (savings, current policies).

Most families need 10-15x annual income.

Term life: Pure death benefit, 10-30 year coverage, $500k costs $25-50/month (healthy 35-year-old).

Best for: most families, temporary needs, budget-conscious.

Whole life: Permanent coverage, cash value growth, $500k costs $400-600/month.

Best for: estate planning, business succession, high net worth. 95% of people better with term life - invest premium difference ($350/month × 30 years = $430k at 7% growth).

Cover all debts that would burden survivors: Mortgage (full remaining balance), Auto loans, Credit cards, Student loans (private ones do not die with you, federal do), Business loans with personal guarantees, Medical debt, Final expenses ($10,000-15,000 funeral/burial).

Do NOT need to cover: Federal student loans (discharged at death), debts in deceased name only with no co-signer.

Total debt coverage typically $200,000-400,000.

Income replacement needs vary by situation: Single earner household: 10-15 years income (family most vulnerable), Dual income: 5-10 years per earner (partner can work), Young children: Until youngest turns 18-22 (17 years if infant), Stay-at-home parent: $300,000-500,000 (childcare, domestic work value). 4% withdrawal rule: Need 25x annual expenses for permanent replacement.

Example: $80,000 expenses × 25 = $2M for perpetual income.

Yes, if you plan to fund children education. 2025 costs per child: Public in-state 4-year: $120,000, Out-of-state: $200,000, Private: $250,000.

Multiply by number of children.

Consider inflation: newborn needs $250,000 for public in 18 years.

Alternative: buy separate 529 college savings policies or ladder term policies.

Many families add $200,000-500,000 specifically for education needs.

Reduce coverage when: Mortgage paid off (drop coverage amount), Children financially independent (22-25), Retirement savings sufficient (have 25x expenses saved), Debts eliminated, Spouse working with own income.

Drop coverage when: No financial dependents, Self-insured (net worth >$2M), Retirement well-funded.

Re-evaluate every 5 years or after major life events.

Many reduce from $1M to $250,000 at age 50-55.