Term vs. whole life: how much coverage do you actually need?

Published June 24, 2026 · By Tom Wertish, Options.Health

“Ten times your salary” is the number everyone throws out, and it’s not wrong so much as incomplete. It ignores debt, dependents, and how many years of protection you actually need. Here’s a more useful way to think about the number, and how term and whole life solve genuinely different problems.

Start with what the coverage actually needs to do

Before picking a number, get specific about what the payout would need to cover if something happened to you tomorrow: remaining mortgage balance, other debts, years of childcare or income replacement until kids are grown, and any future costs like college. A policy sized around your actual situation almost always lands somewhere different than a flat income multiple.

A more useful way to estimate the number

One common framework, sometimes called the DIME method, adds up four categories:

• Debt — credit cards, car loans, and other balances beyond the mortgage
• Income — years of income your family would need replaced, multiplied by your annual income
• Mortgage — your remaining mortgage balance
• Education — estimated future costs for each child

Add those together and you get a number tailored to your actual finances, not a generic multiple. For a lot of young Minnesota families, that number lands somewhere between $500,000 and $1.5 million — often higher than the simple “10x salary” shortcut would suggest.

Term: matches the years you actually need protection

Term life insurance covers you for a set number of years — typically 10, 20, or 30 — at the lowest cost per dollar of coverage. It’s built for exactly the situation most young families are in: a large need (mortgage, young kids, income replacement) that shrinks over time as the mortgage gets paid down and kids grow up. Pick a term length that roughly matches how many years that need actually lasts.

Whole life: the other job it does

Whole life insurance never expires and builds cash value over time, but costs meaningfully more per dollar of coverage than term. It’s a better fit for permanent needs — final expenses, estate planning, or a legacy goal — than for temporarily replacing a working income. Many families use a smaller whole life policy specifically for final expenses alongside a larger term policy for the working years, rather than choosing one or the other for the entire need.