How to find your best number
Follow this general philosophy to find your own target coverage amount: financial obligations minus liquid assets.
1. Calculate obligations: Add your annual salary (times the number of years that you want to replace income) + your mortgage balance + your other debts + future needs such as college and funeral costs. If you’re a stay-at-home parent, include the cost to replace the services that you provide, such as child care.
2. From that, subtract liquid assets such as: savings + existing college funds + current life insurance.