How Much Life Insurance Should Parents Buy?

Here’s what parents can do to figure out what life insurance they need.

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As a parent, you know life insurance is important. Young children need financial support throughout their childhood. Older children may also need help from time to time. You also 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 is important to have enough insurance to provide for your children in case you are 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 deciding how much life insurance do you need. Some say you need 10 times your annual income, others say you need 12, etc. The truth is, life insurance is not that simple.

Johnny Ellis, owner and principal agent at Ellis Agency Insurance, says, “If you use a cookie-cutter system, you’re going to get results that may not meet your needs.”

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Factors Parents Should Consider When Buying Life Insurance

Instead of focusing on a one-size-fits-all life insurance formula, it’s better to consider your unique situation. Consider the factors below while you make your decision.

The ages of your children

Your grown children will not rely on you as much as babies, toddlers and teenagers. It is generally accepted that children can fend for themselves at 18. However, if your children are 10 and 12 years old, you know that one will be completely financially dependent on you for another eight years and the other for another six.

Your income

Your children are used to the life your income provides. It is important that your life insurance is able to provide the same financial lifestyle throughout their childhood and young adult life.

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

The role you play outside of providing income

Your income isn’t the only factor you play in your children’s lives, and it has monetary value. For example, you can take care of your children while your spouse is at work and vice versa. If you weren’t there to do it, your family wouldn’t just lose your income, they’d probably have to bear the extra cost of childcare.

Ellis points out, “you have to think not only in terms of lost wages, but also in terms of other non-monetary contributions that will have to be handled differently after the loss of a loved one.” He went on to say, “Think about who she babysits, washes, dishes, cleans the house and does yard work for both partners. Consider that the surviving partner will not be 100% for a while, no matter how difficult it may seem.’

Your children’s health needs

All children should be able to see a doctor from time to time. Some have more health needs than others. Consider your children’s health care needs and whether there are additional costs associated with taking care of those needs beyond the cost of insurance. For example, you may need to consider transportation costs, in-house caregiver costs, and other health-related costs for children with special needs.


As a parent, you want to make sure your children get the best in life. To do this, they will need a meaningful education. It is wise to get accurate estimates for college education and consider this when choosing how much life insurance you need.

Your budget

You can too use your budget to determine how much life insurance you can afford. Ultimately, you will need to be able to afford the policy you choose. Ellis puts it this way: “Start somewhere. In the worst case scenario, decide how much you can spend in total monthly. Then find an independent agent to maximize your premium for long-term coverage for each parent.”

The bottom row

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

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