Life insurance is one of the most important things a young family can buy, but most people either guess at the amount or rely on coverage through work. With Denver-area home prices and childcare costs among the highest in the country, the right number for a Colorado family is often higher than people expect.
A Simple Starting Point
A common rule of thumb is 10 to 12 times your annual income. A more accurate approach adds up what your family would actually need:
- Income replacement: the number of years your family would rely on your income, times your take-home pay.
- Mortgage payoff: the remaining balance on your home.
- Other debts: car loans, student loans, and credit cards.
- Childcare and education: Colorado full-time childcare can cost well over $15,000 a year per child, and college costs keep rising.
- Final expenses: funeral and burial costs, often $10,000 or more.
Subtract existing savings and any life insurance you already own. The difference is your coverage gap.
Don’t Forget a Stay-at-Home Parent
A parent who stays home provides childcare, transportation, and household management that would be expensive to replace. Coverage on both parents protects the family either way.
Why Work Coverage Usually Isn’t Enough
Group life insurance through an employer is often one or two times your salary, and it usually ends when you leave the job. A personal term policy you own stays with you.
Term Life Is Usually the Best Value
For most families, a 20- or 30-year term policy covers the years when children are at home and the mortgage is largest. A healthy non-smoker in their 30s can often buy $500,000 of 20-year term coverage for roughly $20 to $40 a month. Learn more about life insurance or ask us for a quick needs analysis.
Have questions about your coverage? Call Johnson Insurance Agency at 303-768-8130 or stop by our office at 14 Inverness Dr. E, Suite G236, in Englewood. We compare coverage from multiple carriers for families and businesses across the Denver metro area and Colorado.
Sources
Wind and Hail Deductibles in Englewood: How They Work and What to Ask
Is Life Insurance Protected From Creditors in Colorado?
