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How much life insurance should parents buy?

As a parent, you know life insurance is important. Young children need financial support throughout their childhood. Adult children may need help from time to time, too. Moreover, you don’t want your end-of-life expenses to become a burden on your loved ones. Life insurance fills these financial gaps when you die.

But simply having life insurance isn’t all you need to consider. It’s important to have enough insurance to provide for your children in the event that you’re not here to do so.

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How much life insurance do parents need?

A quick search online will give you three or four different rules of thumb to follow when you determine how much life insurance you need. Some say you need 10 times your annual income, others say you need 12 and so on. The truth is, life insurance isn’t that simple.

Johnny Ellis, Owner and Principal Agent at Ellis Agency Insurance says, “If you use a cookie cutter system, you will have cookie cutter results that might not satisfy your needs.”

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Factors parents should consider when buying life insurance

Rather than focusing on a one-size-fits-all formula for life insurance, it’s better to consider your unique situation. Think about the factors below as you make your decision.

Your children’s ages

Your adult children won’t rely quite as heavily on you as babies, toddlers and adolescent children. It’s generally accepted that children can fend for themselves at the age of 18. Nonetheless, if your children are 10 and 12 years old, you know that one will be completely financially dependent on you for eight more years and the other will be for another six years.

Your income

Your children have grown accustomed to the life your income provides. It’s important that your life insurance is capable of providing the same financial lifestyle throughout their childhoods and into their young adult lives.

This is where the general rules of thumb of 10 or more times your annual income come into play. Sure, that may be a necessity, but it’s only part of the story. Nonetheless, you should consider your annual income as a factor for determining how much life insurance you need as a parent.

The role you play beyond the provision of income

Your income isn’t the only factor you play in your children’s lives that comes with a monetary value. For example, you may take care of your children while your spouse is at work and vice versa. If you weren’t there to do so, your family wouldn’t just lose your income, they’d likely have to endure the added expense of childcare.

Ellis points out, “you have to think not only in terms of salary lost but also in terms of other nonmonetary contributions that will have to be handled in another manner after the loss of a loved one.” He continued saying, “consider who does babysitting, laundry, dishes, house cleaning and yard work for both partners. Consider the surviving partner will not be 100% for a while no matter how tough they may seem.”

Your children’s health needs

All children need to be able to go to the doctor from time to time. Some have more health needs than others. Consider your children’s health needs and whether or not there’s an added cost involved in taking care of those needs outside of the cost of insurance. For example, you may need to consider transportation expenses, in-house caregiver expenses and other health-related expenses for children with special needs.


As a parent, you want to make sure your children get the best in life. To do so, they’ll need a meaningful education. It’s wise to get accurate estimates for college tuition and consider this as you choose how much life insurance you need.

Your budget

You can also use your budget to determine how much life insurance you can afford. After all, you’ll have to be able to afford the policy you choose. Ellis puts it like this: “Start somewhere. Worst case scenario, decide how much you can spend monthly total. Then find an independent agent to maximize your premium to term coverage for each parent.”

The bottom line

The bottom line is that as a parent, determining how much life insurance you need can be tricky, but it’s a necessary evil. Sometimes, the best thing you can do in situations like these is to speak with a professional. Reach out to a licensed insurance agent to determine how much insurance you need.

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