Life Insurance 101: How Much Coverage Does Your Family Actually Need?
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- Jul 2
- 2 min read
For many New Jersey families, life insurance is one of those things that gets put off, until a new baby, a mortgage, or a career change makes it feel urgent. The truth is, most people end up underinsured simply because nobody walked them through the math.
A Few Ways to Estimate Your Coverage
There's no single "right" number, but a few common approaches can get you into the right range:
Income multiple: a common starting point is 6 to 10 times your annual income, adjusted up or down based on debt, dependents, and how many years of support your family would need.
The DIME method: add up your outstanding Debt, the years of Income your family would need replaced, your remaining Mortgage balance, and future Education costs for your kids. The total gives a more personalized target than a flat multiple.
Age-based guidance: younger families with more years of earning potential ahead often lean toward a higher multiple, tapering down as you get closer to retirement age.
Term vs. Permanent: The Short Version
Term life insurance covers you for a set period, like 10, 20, or 30 years, and is usually the most affordable way to get meaningful coverage while your kids are young or your mortgage is outstanding. Permanent policies (whole or universal life) cost more but build cash value and last your entire life, worth considering once your term needs are covered or for estate planning purposes.
Get a Number That's Actually Yours
Rules of thumb are a starting point, not a final answer. Your real number depends on your mortgage, your kids' ages, your spouse's income, and what you want your family's financial life to look like if the unexpected happens. IgoQuote compares term and permanent life policies across multiple A+ rated carriers, so you're not stuck with whatever one insurer happens to offer.
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