There’s an old—rule-of-thumb which says you should have 7-10 times your annual income in insurance. So, if you make $50,000 a year you should have $350,000 to $500,000 insurance coverage. That would make a decent insurance.

These are the things that go in your insurance calculation:

The amount of money you have in savings and investment. Regular monthly living expenses of your family. That would be about $25,000 to $150,000 for an average person. Any expenses related to your death (funeral arrangements). It would be approximately $10,000. The maximum ball-park figure in case your death is preceded by a prolonged illness. Estate taxes. Unpaid debt excluding your mortgage. Liquid cash for unanticipated emergencies. College tuition of your children. You can keep that at about $75,000 for each child. The cost of daycare and other expenses if your children are still young and the number of years you expect to incur such expenses. Spouse’s living expenses. You need to consider spouse’s income which will be deducted from amount of money needed to arrive at a realistic figure. Current inflation rates. Current interest rates for your saving and investment. Federal and state tax rates. Your gender will also affect the amount of life insurance you should buy.

You can easily search for insurance calculators online. Various insurance companies also provide such services on their website, free of cost. The websites will also auto-suggest policies suitable for the arrived calculation.

After a calculation if the calculator shows a negative figure, it means you don’t need it.

Don’t totally rely on calculator. It is just for initial calculation. You do need the guidance from a good insurance agent.