Short answer
For many households still dependent on employment income, term insurance can provide straightforward protection during the years that income matters most. Permanent insurance serves different planning purposes and should be evaluated separately. Start from who depends on your income and for how long — the coverage amount follows from that, not from a sales pitch.
The coverage formula, at a glance
Income to replace, plus debts, minus what you already have.
$1.2M
$60k/yr × 20 years
$300k
mortgage payoff
$200k
existing savings
$1.3M
coverage target
The rough 10×-income rule ($1.0M here) lands in the same neighborhood — that's its job: a sanity check, not a prescription.
The decision
You're replacing the income people depend on if you die — for exactly the years they'd need it. That means answering four questions: who depends on your income, what they'd need each year, which debts must be covered, and what you already have.
Term life covers a temporary need (kids growing up, mortgage getting paid) with a temporary product. That's why it's the usual fit in your 30s: the need has an end date.
The simple rule — a rule of thumb, not a law
Rule of thumb: 10–12× gross income in 20–30 year term life is a rough starting point — but only a starting point. Subtract existing savings, adjust up for a mortgage, young kids, or a non-earning spouse. Actual needs vary widely; the worksheet below beats the multiple.
Worked example
A $100,000 earner with two young kids and a mortgage — two ways to size it:
Rough rule · 10× income
$1.0M
Fast sanity check. Adjust up for a mortgage, young kids, or a non-earning spouse.
Needs-based · worksheet
$1.3M
$1.2M income replacement + $300k mortgage − $200k savings.
The two methods land in the same neighborhood — that's the point of the rough rule. Term life in your 30s is typically one of the cheapest financial products you'll ever buy.
Illustrative math, not personalized advice. Your numbers will differ.
What changes the answer?
Number and age of kids
Young kids = longer coverage need. A 20- or 30-year term usually covers them to independence.
Spouse's income
A non-earning spouse needs more coverage — and don't forget the replacement cost of their unpaid labor (childcare isn't free).
Outstanding debts
Mortgage, student loans, and co-signed debts get added to the target; they're claims on the same income.
Existing assets
Savings, 401(k)s, and any existing coverage get subtracted — insurance fills the gap, not the whole picture.
Health and age
Younger and healthier = cheaper. Every year you wait, the same coverage costs more.
Watch out for
- Buying permanent insurance for a temporary need. If the need ends when the kids launch, the product should end too — and cost far less.
- Underinsuring a non-earning spouse. Full-time childcare and household management have a replacement cost; price it.
- No named beneficiaries. A policy without current beneficiaries can land in probate — the delay your family doesn't need.
- Never reviewing coverage. Revisit after a new child, a new mortgage, or a big raise; needs shrink as kids grow and debts fall.
Don't forget the other two
Disability insurance protects the same income while you're alive — statistically the more likely claim. Look for an own-occupation policy replacing roughly 60% of income; employer group coverage is a start, not the finish.
Estate documents: a will naming guardians for minor children, plus current beneficiaries on every account. Life insurance without a will still leaves the guardianship question unanswered.
Run the numbers
Work the rough target yourself — add the needs, subtract what you have:
Rough estimate, not advice. Sanity-check it against the 10–12× rule of thumb — the worksheet beats the multiple.
What should you look at next?
Insurance protects your income; the will and estate documents decide who receives it and who acts for your family.
Related questions
Last updated September 2026. General education for U.S. earners age 25–40 — not tax, legal, or investment advice.