top of page
Search

How to Determine Your Ideal Life Insurance Coverage

  • Writer: Rolland & Associates
    Rolland & Associates
  • Mar 17
  • 2 min read

When it comes to life insurance, one of the most common questions people ask is: "How much coverage do I really need?" The answer isn’t one-size-fits-all. It depends on your unique circumstances, financial goals, and the legacy you want to leave behind. Let’s break it down so you can make an informed decision.



1. Assess Your Financial Obligations 

Start by taking a close look at your current financial responsibilities. Consider factors like:

  • Outstanding Debts: Mortgage, car loans, student loans, and credit card balances.

  • Income Replacement: Multiply your annual income by the number of years your family would need financial support.

  • Future Expenses: College tuition for your kids, retirement savings for your spouse, or any long-term care needs for aging parents.


2. Account for End-of-Life Costs 

Funeral expenses, medical bills, and legal fees can add up quickly. On average, funerals alone can cost between $7,000 and $12,000. Ensuring these expenses are covered will prevent added stress for your loved ones.


3. Consider Your Assets 

Next, evaluate any existing assets that could help offset costs, such as savings, investments, or other insurance policies. Subtract these assets from your total financial obligations to get a clearer picture of the coverage you might need.


4. Use the "DIME" Method 

A popular strategy for calculating life insurance needs is the DIME method:

  • Debt: Total outstanding debts.

  • Income: Multiply your annual income by the number of years your family will need support.

  • Mortgage: Remaining balance on your mortgage.

  • Education: Estimated cost of future education for your children.


5. Factor in Peace of Mind 

Lastly, think about the emotional comfort life insurance can provide. Knowing your loved ones are financially secure in your absence offers invaluable peace of mind.


The Bottom Line 

There’s no magic number when it comes to life insurance, but a good rule of thumb is to aim for 7 to 10 times your annual income. Consult with our team who can help you tailor a policy that fits your specific needs.


Taking the time to calculate the right amount of life insurance ensures your loved ones are protected, no matter what the future holds. After all, life insurance isn’t about you — it’s about the people you care about most.

 
 
bottom of page