How Much Life Insurance Do I Need?

Published December 01, 2022

Deciding how much life insurance you want can feel like a daunting task, but it doesn’t need to be.  If you’re feeling overwhelmed, take a deep breath and relax. There are some simple ways to calculate how much life insurance you need and we’re here to help.  As you read through this article we will share 5 easy ways to help determine how much life insurance you need.

Instant Decision Life Insurance

You can quote, customize and buy life insurance in 10 minutes or less! No need to wait to speak to an agent, you got this!

Income Multiplier Method

One way to calculate how much life insurance you need is to multiply your income by 10. So, if you make $50,000 per year, you would need $500,000 of life insurance coverage. This is a very simple method and is a good starting point. This method doesn’t take into account other important factors like debts and expenses or how long you would like to replace your income if you were to unexpectedly pass away.

The Per Child Method

If you have children, you’ll want to make sure they are taken care of financially if something happens to you. A good rule of thumb is to add $200,000 of life insurance coverage for each child you have under the age of 14 and $100,000 for each child you have over the age of 14. So, if you have two children ages 10 and 15, you would need $300,000 of coverage (Age 10 = $200,000 + Age 15 = $100,000 = $300,000 total). You may want to consider combining this method with the income multiplier method so you can provide an income for your spouse or family to help raise your children in your absence.

The DIME Method

Another simple way to calculate how much life insurance you need is to use the DIME method. DIME stands for Debts, Income, Mortgage, and Education (and Everything Else).

To use this method, start by adding up all of your debts (car loans, credit card debt, etc.). Then add up your annual income. Next, estimate how many years your loved ones will need income replacement if something happens to you. Now add your remaining mortgage balance. Finally, add up how much you would like to set aside to help pay for your spouse’s or your children’s education in your absence.

Example:
STEP 1: Let’s say your Debt picture looks like this; you have $35,000 or credit card debt, $32,000 left on your Auto Loan, and $23,000 or remaining student loans. So far your need using this method is $35,000+$32,000+$23,000 = $100,000 is your need for Debt.

STEP 2: Now let’s look at your Income. Let’s say your income is $60,000 per year. if you want to provide 10 years’ worth of income replacement, you take your $60,000 x 10 = $600,000 is your need for Income. (our done for you income replacement process will take into account investment earning on this money).

STEP 3: Mortgage considers how much is needed today to pay off your outstanding mortgage on your home(s). For this example, we will consider a remaining mortgage balance of $325,000. $325,000 is your need for the Mortgage portion.

STEP 4: And last but not least, we need to consider how much you would like to provide to offset or pay for the cost of education for a surviving spouse or partner and/or your children. The average tuition fees in 2021-2022 were $10,423 for public, in-state tuition. This does not include room and board or other school-related expenses. If you wanted to cover 4 year of public, in-state tuition for your two children for 4 years each, take $10,423 x 4 x 2 = $83,384 is your need for Education. Here is where you could add in everything else like; final expenses, and creating a short term emergency fund for your loved ones (helpful so they can afford time off work while they are grieving).

STEP 5: Finally, you need to add up these 4 categories to come to your total need: $100,000 + $600,000 + $325,000 + $83,384 = $1,108,384 is your total need using the DIME method.

Affordability Method

You can’t keep what you can’t afford and we believe life insurance is something you should keep.  Many people significantly overestimate the cost of life insurance.  One rule of thumb is to consider spending 1% – 2% of your income on life insurance.  This is at least a good gauge to help you with your budget.  For example, if you are making $60,000 per year as your income, you could begin with a budget of $600 – $1,200 annually for life insurance.  If you’re a 40 year old male you could buy  $900,000 of 10 year term and spend less that $600 per year.  The length of term insurance will change your premium as well.  10 year term is the most affordable coverage and 30 year term lasts the longest period of time, for term insurance.
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Age

Gender

$100,000

$250,000

$500,000

25

25

25

Female

Male

Instant Decision

$7.66

$9.40

Instant Decision!

$10.01

$14.36

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$13.92

$22.62

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35

35

35

Female

Male

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$8.53

$9.40

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$12.18

$14.36

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$18.27

$22.62

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45

45

45

Female

Male

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$12.09

$14.62

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$20.23

$24.58

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$34.37

$43.07

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50

50

50

Female

Male

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$17.05

$20.79

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$29.15

$36.76

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$51.77

$64.38

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55

55

55

Female

Male

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$23.84

$29.58

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$42.20

$53.29

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$73.52

$93.53

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60

60

60

Female

Male

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$34.02

$46.11

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$61.77

$84.83

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$107.88

$148.77

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65

65

65

Female

Male

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$51.94

$70.12

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$95.48

$129.85

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$164.87

$224.90

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**The above rates were verified on January 19, 2023 and were run for the Age & Gender shown, in the State of Colorado at Preferred Plus underwriting (best underwriting) on 10 Year Term. These rates are not a valid offer, you will need to complete a quote to view the initial rate for your situation, and the application process will verify your rate.

Using One of Our Solutions

We have created several solutions for Personal and Business Insurance to help you determine, organize, apply and buy life insurance in less than 10 minutes.  Without needing to talk with an agent.  Here is a list of our current personal life insurance solutions:

Build your own plan – this allows you to choose your coverage amount, and instantly see your rates.  You can also instantly choose other policy benefits, change benefit amounts, change coverage duration and see the results instantly on your screen.  Then you can apply and be approved in minutes!

Income Replacement – this process takes the guesswork out of your insurance plan.  If your family or partner has your income continuing they should be able to afford their current lifestyle for the number of years you select.  We handle all of the math for you and provide you with a nice, easy-to-understand report so you don’t forget the WHY behind your plan.  You can get your report and apply for coverage in 10 minutes or less!

Mortgage Replacement – this is a simple process that is designed to help you pay off your mortgage balance if the unexpected were to happen.  We provide you with an easy-to-understand report detailing your mortgage replacement plan.  You can get your report and apply for coverage in less than 10 minutes!

Needs Analysis – this is a simple plan that combines the elements listed in this article and allow you to determine your complete need and subtract out any existing, easy to sell or liquidate, assets to offset that need.  You can get a detailed report and apply for coverage in less than 10 minutes!

Which Type of Insurance is right for you?

Everyone has their own needs, wants, and wishes for buying life insurance. Ultimately the best life insurance policy is the one that pays out to your beneficiaries when you need it to. Working with a Quote-Bot will help you find a budget-conscious life insurance plan to make sure your family members or business partners are properly taken care of when you need them to be. Here are two of our most popular term life insurance products.

10-year term life insurance

20-year term life insurance

  • Low Premium Payments
  • Level Premium for 10 Years
  • Level Death Benefit
  • Coverage for a Shorter Needs
  • Able to Convert to Permanent Insurance
  • Generally Provides a Tax-Free Death Benefit
  • No Cash Value Accumulation
  • Low Premium Payments
  • Level Premium for 20 Years
  • Level Death Benefit
  • Coverage for a Longer Needs
  • Able to Convert to Permanent Insurance
  • Generally Provides a Tax-Free Death Benefit
  • Possible to have Return of Premium

Why work with quote bot?

We simplify the insurance quoting and application process without sacrificing your freedom of choice. You see what an agent would see, there is no hidden information. Then you can make decisions on your own, apply, and receive an instant decision all in less than 10 minutes.

Fast Quoting Process

Our quoting process takes about a minute to complete and view your quote. We also instantly update your quote with any changes you would like to see, without having to start all over!

Instant Decision Underwriting

For many, you can go from our quote to a completed purchase in less than 10 minutes! Our Instant Decision process keeps you from having to wait around to see if you qualify.

Solutions That Fit Your Needs

We pride ourselves in providing high-quality and well-planned solutions no matter how big or small your need is. Our solutions will bring you from concept to completed purchase in minutes!

Frequently Asked Questions

Nuestro proceso y nuestras soluciones están diseñados para ayudar a eliminar la necesidad de hablar con un agente. Pero sí, puede hablar con un agente si lo desea. Puede utilizar la función de chat de esta página o llamar y hablar con un agente.

Our process and solutions are designed to help remove the need to talk with an agent.  But yes, you can speak with an agent if you like.  You can use the chat feature on this page or call and speak with an agent.

El impago de una prima es un asunto importante que hay que tener en cuenta y, afortunadamente, existen programas que le ayudan a recibir una notificación en caso de impago. Normalmente, dispone de un periodo de gracia de unos 30 días para efectuar el pago. La compañía de seguros le enviará un correo electrónico, pero también puede enviarle correo en papel, para informarle del problema de pago y darle instrucciones sobre cómo resolverlo. Si no efectúa ningún pago durante el Periodo de Gracia, tendrá que volver a someterse al proceso de suscripción para mantener su cobertura.

Missing a premium is an important thing to know about and thankfully there are programs in place to help notify you if you do miss a payment. Typically you have around a 30-day grace period to make your payment. The insurance company will email you but may send you paper mail, making you aware of the payment issue and giving you instructions on how to resolve it. If you do not make a payment during the Grace Period, you will have to go through underwriting again to keep your coverage.

Si tiene entre 18 y 50 años y solicita una prestación por defunción de hasta 1.000.000 $, o si tiene entre 51 y 65 años y solicita una prestación por defunción de hasta 500.000 $, es posible que no necesite someterse a un examen. Cuando presenta una solicitud fuera de esas edades o prestaciones por defunción, se le exige un examen médico. No te preocupes, te ayudaremos a organizarlo. Estos exámenes son obligatorios (si son necesarios) para que la compañía de seguros pueda comprobar si cumple los requisitos y el importe de la prima.

If you are age 18-50 and applying for up to $1,000,000 of Death Benefit, or ages 51-65 applying for up to $500,000 of Death Benefit, you may not need an exam! When you apply outside of those death benefits or ages, you are required to have a medical exam. Don’t worry, well will help arrange that for you. These exams are required (if needed) so the insurance company can verify your eligibility and your premium amount.  

Decisión instantánea significa que le comunicaremos inmediatamente (posiblemente hasta en 90 segundos) si ha sido aprobado o no, si necesitamos más información, si ha sido rechazado o si necesita un examen. No hace falta esperar mucho para obtener respuestas.

Instant decision means that we will let you know immediately (possibly up to 90 seconds) whether or not you are approved, if we need more information, if you were declined or if you need an exam. No need to wait around very long for answers.

Nuestro proceso de Decisión Instantánea tarda 10 minutos en completarse para la mayoría. Algunos son más rápidos, otros más lentos. La buena noticia es que una vez que haya terminado de rellenar su solicitud, le daremos las respuestas al instante o en un plazo de 90 segundos más o menos. Es rápido.

Our Instant Decision process takes 10 minutes for most to complete. Some are faster, some are slower. The good news is that once your done with your application, we give you answers anywhere from instantly or up to a 90 second wait or so. It’s Fast!

No. Nos esforzamos por ofrecer una solución que le permita ir de principio a fin en cuestión de minutos sin necesidad de hablar con un agente.

No. We strive to provide a solution that allows you to go from beginning to end in minutes without the need for speaking to an agent.

An Agent-Less Process

Life is busy, and most people don’t have the time to buy life insurance the traditional way. We get it. So we’ve made it possible for you to quote, customize and buy life insurance in less than 10 minutes without needing an agent.