How much life insurance do you really need?

Life insurance offers clear benefits, but how much coverage do you need? People from all walks of life deal with this question. There's no one-size-fits-all answer. You have to look at your expenses and figure out the policy amount that works for you. Let's look at a few considerations to help you determine how much life insurance you may need.

Life insurance considerations

Credit card debt

As of December 2025, the average American household has about $11,149¹ in credit card debt or unpaid amounts that roll over from month to month.  If you’re among the many Americans dealing with this debt, it should be factored in to decisions about your life insurance needs. You don't want to leave your family to deal with your credit card debt, which may be difficult to pay back, depending on the fine print.

Mortgage payments

Homeownership is a point of pride for most people — and for good reason. But maintaining a mortgage can be tricky. The typical U.S. homeowner pays on a $233,580² mortgage, and those installments don’t stop until paid off.  This means you could very well end up passing your home loan on to your family members. You can try to avoid this by covering it in your policy, so long as you’ve purchased the right life insurance coverage amount. Calculating the necessary sum should be simple, as long as you don't refinance or make other major changes to your mortgage.

Car loans

U.S. families maintain $1.67 trillion in automotive loans, which works out to about $37,832³ per household.  While car loans are generally easier to manage than other forms of debt, you still don’t want to leave additional debt to your loved ones. Life insurance may help avoid this issue by calculating your existing automotive loan into your policy. That way you can leave behind the amount necessary to pay it off. 

Student loans

If you're among the millions paying student debt, keep in mind that much of it won't go away after you pass. While some federal loans are dismissed following the death of the borrower or cosigner, private loans stick around and must be paid off. What's more, even when loans are forgiven, this may result in other expenses, such as taxes. Covering these expenses in your life insurance plan may mean your family isn't stuck paying off your school debt.

Funeral expenses

Funeral services are expensive. A traditional burial ceremony with a coffin costs around $8,300⁴ in the U.S. Even cremation services can carry hefty expenses. Leaving your loved ones to cover these and other funeral fees is not ideal. As you think about your life insurance options, include funeral expenses in your policy amount so that your relatives can give you the service you deserve without taking on extra costs or debt.

College or trade school tuition

Do you have kids or dependents who want to attend college someday? Or maybe they intend to go the trade school route? You probably know that higher education costs are at an all-time high. Prices are even higher for students taking classes at private schools. Your life insurance plan may be able to help cover your children's education costs.

As you figure out how much life insurance you might need, take these items into account and consider working them into your policy. Your loved ones will thank you for it.