Smart Ways to Calculate What’s Right for Your Family and Lifestyle

Life insurance is one of those things that people often don’t think about—until it’s too late. But if you’ve ever asked yourself, “How much life insurance do I actually need?”—you’re not alone. It’s one of the most common and crucial questions families face when planning for the future.
As a financial advisor with decades of experience, I’m David Kassir from Manna Wealth Management, and I’ve helped countless clients find peace of mind by choosing the right amount of life insurance—not too much, and definitely not too little.
In this article, we’ll break it all down step by step:

✅ How to calculate your ideal coverage
✅ What financial factors you must consider
✅ Real-life examples to help you make smart, informed decisions
✅ Tools and tips to tailor it to your unique lifestyle
And if you still need guidance, feel free to contact us directly for a personalized consultation.

🔍 Why Life Insurance Matters More Than You Think

If something were to happen to you tomorrow, could your loved ones maintain their current lifestyle without your income?
Life insurance isn’t about you—it’s about protecting the people who depend on you.
It can:
• Cover daily living expenses
• Pay off debt and mortgages
• Fund college tuition
• Handle final expenses
• And ensure your family’s financial stability

🧮 The Golden Rule: 10 to 15 Times Your Annual Income?

You’ve probably heard the old rule: Buy life insurance equal to 10–15 times your annual income. While this can be a helpful starting point, it’s often too general.
Instead, let’s look at a more personalized formula.

📊 Step-by-Step Life Insurance Calculator
Here’s a simple formula we use at Manna Wealth Management to help clients figure out how much life insurance they really need.
✅ 1. Start with Immediate Expenses
These are costs your family would face right away if you passed unexpectedly:
• Funeral and burial: $10,000–$15,000
• Medical bills: Varies
• Legal fees, estate planning, etc.
💡 Example: Add $20,000 for these needs
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✅ 2. Add Outstanding Debts
Include your:
• Mortgage balance
• Auto loans
• Credit cards
• Student loans (if applicable)
💡 Example: Mortgage ($250,000) + Credit cards ($10,000) = $260,000
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✅ 3. Income Replacement
Ask yourself: How many years would your family need to replace your income? Common answers range from 5 to 20 years depending on your age and dependents.
Formula:
Your Annual Income × Number of Years Your Family Will Need It
💡 Example: $75,000 income × 10 years = $750,000
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✅ 4. Add Future Obligations
Think about:
• College tuition: ~$25,000 to $100,000 per child
• Childcare support
• Weddings
• Elder care for aging parents
💡 Example: College for two kids = $200,000
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✅ 5. Subtract Existing Resources
You may already have:
• Existing life insurance through work
• Savings and investments
• Retirement accounts
• Social Security survivor benefits
💡 Example: $100,000 in savings + $50,000 workplace policy = $150,000 to subtract
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🧠 Final Calculation:
Category Amount
Immediate Expenses $20,000
Debts $260,000
Income Replacement $750,000
Future Obligations $200,000
Total Need $1,230,000
Existing Assets to Subtract -$150,000
Coverage Needed $1,080,000
✅ In this example, the person needs approximately $1.08 million in life insurance coverage.
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💡 Bonus: Use the DIME Method for Quick Estimates
If you’re looking for a simpler shortcut, try the DIME formula:
• Debt
• Income (multiplied by years needed)
• Mortgage
• Education costs
This isn’t as detailed as our step-by-step method, but it gives you a quick ballpark estimate.
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👨‍👩‍👧‍👦 Tailor Coverage to Your Lifestyle
Different people need different coverage amounts. Let’s look at a few quick scenarios.
👶 Young Family with Kids
• Focus: Replace income, pay off mortgage, fund education
• Likely need: $1M–$2M coverage
🏡 Empty Nesters
• Focus: Final expenses, supporting spouse’s retirement
• Likely need: $250K–$750K coverage
💼 Business Owners
• Focus: Business succession planning, key person insurance
• Likely need: Varies greatly—may need $2M+
Every family and lifestyle is different. That’s why personalized advice is key. You can schedule a consultation with me directly to get a clearer picture.
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❗ Common Mistakes to Avoid

🚫 Relying only on employer-provided insurance
If you leave your job, that policy typically doesn’t go with you.
🚫 Ignoring inflation
Costs go up over time. Be sure your coverage is enough for future dollars, not today’s.
🚫 Underinsuring stay-at-home spouses
Even if they don’t bring in a paycheck, their role has real economic value—childcare, transportation, household management.
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🔍 Term vs. Whole Life Insurance: What’s Right for You?

• Term Life Insurance: Affordable, fixed duration (10, 20, 30 years). Great for young families and income protection.
• Whole Life Insurance: Lifetime coverage with cash value component. More expensive, but can be part of an estate planning or wealth strategy.
Need help choosing? Let’s discuss what makes sense for your life stage: Talk to a licensed advisor now
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💬 Final Thoughts from David Kassir

Getting life insurance isn’t just a financial decision—it’s an act of love, responsibility, and legacy. The amount you choose should reflect not just your income, but your values and vision for your family’s future.
If you’re unsure about how much coverage you need or want a second opinion, don’t leave it to chance.