How Much Life Insurance Do You Really Need?

A Practical Checklist for Planning

Life insurance is not a "set it and forget it" decision—it’s an important financial tool that should evolve with your changing life circumstances. At a minimum, you should review your life insurance policy once a year. An annual review allows you to check in on your overall financial situation, identify any major changes, and ensure your coverage is still adequate.

Goal: Calculate how much income your dependents would need in your absence to maintain their current lifestyle and to achieve future milestones.

This life insurance checklist is intended for general informational purposes only. It has been compiled from various sources, including personal experiences and expert advice, to help guide you through evaluating your life insurance needs. It is not intended to be, and should not be construed as, legal or financial advice. The use of this checklist does not establish any professional relationship between you and the authors or any affiliated parties. For personalized financial advice, we strongly recommend consulting with a licensed insurance agent or financial advisor.

1. Family Needs Assessment

• Who relies on your income?

  • Do you have children, a spouse, elderly parents, or other dependents?
    ☐ Yes ☐ No

  • If yes, how many dependents need financial support from you?
    ___ Number of dependents

• What is your family’s current monthly household income?
  $___ /month

• How long would your family need support if something happened to you?

  • 1-2 years? 5 years? 10 years?
    ___ Years

• Do you want to provide income for future milestones (education, weddings, etc.)? ☐ Yes ☐ No

  • If yes, estimate the cost of these future milestones.
    $______ Amount

2. Debt and Financial Obligations

• Do you have any outstanding debts (mortgage, car loans, student loans, credit card debt)? ☐ Yes ☐ No

  • If yes, list all major debts:
    ___ Mortgage: $ ___
    ___ Car loan(s): $ ___
    ___ Credit card debt: $ ___
    ___ Other: $ ___

• Do you have business-related debts (business loans, co-signed loans, etc.)? ☐ Yes ☐ No

  • If yes, estimate the total business-related debts.
    $ ___

3. Funeral and Final Expenses

• Have you considered the cost of funeral and burial expenses? ☐ Yes ☐ No

  • Estimated cost: $ ___ (typically $7,000–$12,000)

• Do you have any medical bills or other final expenses that would need to be covered? ☐ Yes ☐ No

  • If yes, estimate the total:
    $ ___

4. Education Costs for Children (if applicable)

• Do you want to contribute to your children’s education (college, trade school)? ☐ Yes ☐ No

  • If yes, how much would you like to allocate per child?
    $ ___ Amount per child

  • How many children need education funding?
    ___ Number of children

• When will your children start their education? Make sure you consider inflation.
  ___ Years from now

5. Current Savings, Investments, and Existing Coverage

• What do you have in savings, retirement funds, or investments that could support your family?

  • Total savings/investments:
    $___

• Do you have life insurance through your employer? ☐ Yes ☐ No

  • If yes, how much coverage do you have through work?
    $___

• Do you have any existing life insurance policies? ☐ Yes ☐ No

  • If yes, what’s the coverage amount?
    $___

6. Policy Type Consideration

• What are your long-term needs?

  • Do you want lifelong coverage or a policy for a set period?
    ☐ Lifelong (Whole or Universal Life)
    ☐ Set period (Term Life)

• Would you prefer a policy that builds cash value, or just coverage? ☐ Cash value (Whole or Universal Life)
  ☐ Coverage only (Term Life)

7. Regular Review and Adjustments

• Has your life changed in the last year (marriage, children, new job, divorce)? ☐ Yes ☐ No

  • If yes, how did it affect your financial situation? Review your monthly expenditures to understand impact.

• Do you anticipate any upcoming major financial changes? (Retirement, paying off debts, etc.) ☐ Yes ☐ No

  • If yes, include those positive or negative values here. $___

8. Total Coverage Estimate

Add up your answers from each section to estimate how much life insurance coverage you might need:

• Family Needs (Income Replacement + Future Milestones):
  $___

• Debts and Financial Obligations (Mortgages, Loans, etc.):
  $___

• Funeral & Final Expenses:
  $___

• Education Costs (if applicable):
  $___

• Existing Coverage (Employer Insurance + Other Policies):
  $___

Total Life Insurance Coverage Estimate Needed: $___

Disclaimer: This checklist is intended solely as a general guide to help you evaluate your life insurance needs. It is not a substitute for professional financial or insurance advice. The content provided here does not constitute personalized financial, legal, or insurance recommendations. We strongly encourage you to consult with a licensed insurance agent, financial advisor, or other qualified professionals who can assess your unique situation and provide tailored advice. Reliance on this checklist alone may not fully address your individual needs, and we do not assume any responsibility for decisions made based on this guide.