Insurance Needs Analysis

You’re pretty sure you need life insurance, but you have no idea how much. Your buddy has $500,000, so maybe that’s enough? An online calculator told you “10 times your income,” which sounds like a lot. An insurance agent tried to sell you $2 million in coverage, which felt like overkill (and suspiciously close to the commission they’d make).

How much life insurance do you actually need? Not a random guess, not a generic rule, not whatever makes an agent the most money—a real number based on your actual financial situation.

We run insurance needs analyses for Phoenix families to figure out exactly how much coverage makes sense. We look at your income, debts, lifestyle, savings, and goals—then calculate how much your family would need if you died tomorrow. The result is a real number you can trust, not a sales pitch.

What Goes Into a Real Needs Analysis

We calculate what your family needs to cover if you die:

Income replacement: How many years of income does your family need replaced? Usually until kids are adults and your spouse has adjusted to a different lifestyle or career. That might be 10-20 years of income depending on kids’ ages and spouse’s earning ability.

Debt payoff: Should the life insurance pay off the mortgage, car loans, credit cards, and student loans? Or just cover payments until the family adjusts? Usually we assume paying off high-interest debt (credit cards, car loans) and covering ongoing mortgage payments rather than paying off a low-interest mortgage entirely.

Education funding: Do you want life insurance to cover college for the kids? That’s $100,000-200,000 per kid depending on public vs private school. Some families include this, others assume kids will take loans or that existing 529 savings are adequate.

Final expenses: Funeral costs, probate, estate settlement—usually $10,000-20,000. Not a huge number, but it adds up.

Emergency fund: Does your family have enough cash savings to handle the transition period after your death, or should insurance provide that too?

Then we subtract what you already have: existing life insurance through work, savings, spouse’s income, Social Security survivor benefits (yes, your family might qualify).

The result is how much additional coverage you need.

Why Generic Rules Fail

“10 times your income” is a starting point, not a real answer. If you make $100,000, is $1 million enough? Depends. If you’ve got $200,000 saved, no debt, and your spouse makes $80,000, maybe $1 million is overkill. If you’ve got $400,000 in mortgage debt, three kids, no savings, and a non-working spouse, $1 million won’t cut it—you might need $2 million.

Online calculators are better than nothing, but they’re still generic. They don’t account for Phoenix-specific costs, existing savings, employer life insurance, or your family’s actual spending. They give you a ballpark number, but not a real analysis.

We run a custom analysis based on your real numbers, not generic assumptions.

What About Employer Life Insurance?

Most employers provide 1-2x your salary in life insurance. That might be $100,000-200,000 of coverage—better than nothing, but probably not enough if you have a family and a mortgage.

Also, employer coverage usually ends if you leave the job. If you get laid off, switch careers, or start a business, you lose that coverage—potentially at a time when you can’t afford to be uninsured.

We subtract employer coverage from your needs analysis so you’re not double-covered, but we recommend getting personal term insurance too so you’re not dependent on staying at your current job forever.

What We Do

We review your income, debts, lifestyle, savings, existing coverage, and family situation. We calculate exactly how much your family would need to maintain their lifestyle, pay off debts, and hit goals like college funding. We subtract what you already have in savings and employer coverage. The result is how much personal term life insurance you need.

We show you the math behind every number—it’s not a black box. You’ll understand exactly where we got the coverage amount and why it makes sense for your situation.

The Bottom Line

Guessing at life insurance coverage is a bad idea. Too little and your family struggles financially. Too much and you’re overpaying for coverage you don’t need. Get a real needs analysis based on your actual situation so you know the right number.

Not sure how much life insurance you need? Let’s run a real needs analysis based on your situation.