Most families buy life insurance with a vague sense that they need some coverage, then pick a number that feels large enough. That instinct is better than nothing, but it often produces a policy that falls well short of what survivors actually need. Getting income replacement right requires working through a few concrete numbers—not guessing.
When a primary earner dies, the household loses more than a paycheck. It loses years or decades of future earnings that fund mortgage payments, childcare, education, groceries, utilities, and retirement savings. Life insurance steps in to replace that stream of income so surviving family members are not forced into immediate financial distress. A policy that replaces too little leaves your family making painful choices. A policy sized correctly buys them time, stability, and options.
The most common rule of thumb is ten times your annual income. That is a reasonable starting point, but it ignores your specific situation. A more accurate approach accounts for:
A common method is to multiply your annual income by the number of years until your youngest child reaches 18 or 22, then add your mortgage balance and subtract liquid assets. The result gives a rough but grounded target.
For pure income replacement, term life insurance is usually the right tool. A 20- or 30-year level term policy can cover the years when your income is most critical—while children are young and the mortgage is large. Premiums are low relative to coverage amounts, and you are not paying for features you do not need. Permanent policies carry higher premiums and are better suited to estate planning or permanent obligations, not temporary income replacement needs.
Choosing a coverage amount without doing the math is one of the most common and costly life insurance mistakes families make. A Truscott coverage review walks you through your household's specific income, obligations, and timeline to produce a figure you can actually defend—not just a round number that feels safe. Reach out to schedule your review before your family's coverage gap gets any larger.
Term life insurance is the most straightforward form of life coverage, but what happens at the end of the term surprises many policyholders. Learn how term life works, what your options are when it ends, and how to plan ahead.
Life InsuranceAvoid the most common life insurance buying mistakes, from underestimating coverage needs to ignoring policy details, so you get the right protection at the right price.