Guide
How much life insurance do you need?
A tool for doing the math and the reasoning that supports it: income years, debts, schooling costs and what you currently have in place.
The most straightforward approach is to calculate the total of what you would have earned and then deduct what you already have in savings or coverage. This calculation doesn't need to be perfectly precise—term coverage comes in round-dollar increments anyway, and the goal is a reasonable figure that would provide stability for the years that really count.
Coverage estimate
Here's a simple starting point: (annual income × years of need) + total debts + college costs − existing savings and group coverage, then round up to the next $5,000. This is a framework for thinking, not financial guidance.
Why those inputs
Income years. Financial planning experts typically recommend ten to twenty years as the income-replacement span; the right figure relies on how many years your dependents will need support. Families in Berkeley with young children tend toward the longer timeframe since housing, childcare and education costs often rise together.
Debts. The mortgage is typically the single largest debt for families. Selecting coverage large enough to eliminate the mortgage gives survivors the choice to keep the home or not, rather than forcing the decision based on money available.
Schooling. A modest amount set aside per child based on today's costs makes sense. It's simpler to include this now than to buy additional coverage later.
What's already in place. Count liquid savings you could dedicate to this purpose, plus group coverage provided by an employer. Many workers should only count part of their group coverage since it terminates when they leave that job.
Once you've determined an amount, use the quotes tool to see how much that coverage costs over 10, 15, 20, 25 or 30 year periods with each carrier. It's standard to purchase somewhat more than your calculated estimate, since the monthly cost increase is minimal during younger years.