A simple framework for sizing coverage around income replacement, debt payoff and the years your children still depend on you.
Most families either guess at a round number or accept whatever their employer offers. Neither approach reflects what it actually costs to keep a household running without one income.
We start with four inputs: annual income to replace, years until your youngest child is independent, total debt including the mortgage, and any education goals you intend to fund.
The income replacement layer
Multiply the income you want replaced by the number of years it needs to last. A household earning $110,000 with a 14-year runway to independence is looking at roughly $1.5M of income replacement before debt or education is considered.
Term insurance is the efficient tool here because the need itself is temporary — it disappears as the mortgage amortizes and the children finish school.
The permanent layer
Final expenses, estate settlement costs and any legacy intent don't expire, so a smaller permanent policy usually sits underneath the term layer. Sized correctly, it stays affordable and never has to be re-qualified for later in life.
Layering is almost always cheaper than buying one large permanent policy, and it lets you reduce coverage on schedule rather than all at once.
Review it annually
Coverage that fit at 34 rarely fits at 44. New mortgage, new child, a raise, a business — each changes the number. We revisit it every year with clients, and reissuing or laddering an additional policy is often less expensive than people expect.
Want this reviewed for your own situation?
A trusted YosaKai agent will walk through your numbers with you.
Request a consultation