How much life insurance does your family need? A 2026 guide

The question almost no one asks in time

The right amount of life insurance isn't a magic number: it's what your family would need to keep going if you were gone tomorrow. In this guide, we show you how to figure it out yourself, with pen and paper, in about 15 minutes.

It's a conversation many families put off, and the numbers show it. According to the 2025 Insurance Barometer Study by LIMRA and Life Happens, only 40% of Hispanic Americans have life insurance, the lowest rate of any ethnic group. In the 2024 edition, 46% of Hispanic families said they would face financial hardship in less than six months if the primary wage earner died.

What's most revealing is why they don't have it. In that 2024 edition, more than 7 in 10 Hispanic Americans (72%) overestimated the cost of term life insurance. The problem is almost never a lack of love or responsibility: it's a lack of clear information.

Why "10 times your income" falls short

The 10-times-your-income rule is a good starting point, but it isn't a plan. If you earn $50,000 a year, the rule says you need $500,000 in coverage, and that's where the analysis ends.

The problem is what that rule doesn't look at:

• Your actual debts. Two families who earn the same can owe very different amounts.
• Your mortgage. A house that's almost paid off isn't the same as one bought two years ago.
• Your kids. A baby isn't the same as a teenager about to finish high school.
• What you already have. Savings or life insurance through work reduce what you still need.
• The parent without a paycheck. For a stay-at-home mom or dad, 10 times zero is zero. And that result is wrong.

That's why we use a method that starts from your family's real obligations, not just your salary.

The DIME method, step by step

DIME stands for Debt, Income, Mortgage, and Education: four things your family would have to cover without you. Add up all four and you have your starting point.

To make it clear, let's use an example. Carlos is 38 and lives in Katy with his wife, Andrea, and their two kids, ages 6 and 10. He earns $55,000 a year.

D: Debt and final expenses

Add up everything you owe except the mortgage: car loan, credit cards, personal loans. Then add funeral costs. According to the National Funeral Directors Association, the median cost of a funeral with a casket and burial was $8,300 in 2023, not counting the cemetery or headstone.

Carlos owes $18,000 on his car and $6,000 on credit cards, and he estimates $12,000 for the funeral, including the cemetery. Total D: $36,000.

I: Income

Multiply your annual income by the number of years your family would need that support. A common reference point is to cover the years when your kids depend most on your income.

Carlos chooses 10 years: $55,000 × 10. Total I: $550,000.

M: Mortgage

Write down what's left to pay on the house, not the original price. The idea is that your family can stay in their home without that burden.

Carlos has $210,000 left. Total M: $210,000.

E: Education

Decide how much you want to leave for each child's education after high school. There's no right answer here: it's a family goal.

Carlos and Andrea choose $40,000 per child. Total E: $80,000.

The result

Compare: the 10-times-income rule would have told him $550,000. With DIME, Carlos sees that the rule would have left him short by more than $300,000.

What traditional DIME misses

Online calculators were designed for an average family. In many Houston families, responsibilities reach further, and your calculation should reflect that.

Money you send to family

If you send money every month to your parents or siblings, here or in another country, that support would also disappear with you. Multiply what you send each year by the number of years you'd want to cover it.

If Carlos sends his mom $300 a month, that's $3,600 a year. Over 10 years, that's $36,000 more: if he decides to include it, his DIME total goes from $876,000 to $912,000. To keep the example simple, we'll stick with the basic total of $876,000.

Parents who live with you

Many families care for a grandparent or another older relative at home: medications, appointments, transportation. If you cover those expenses, include them under Income.

When both of you work

A common mistake is to calculate only for the higher earner. If Andrea also works, her income supports part of the household, and she needs her own DIME calculation and her own policy.

When one of you stays home

Here's the costliest mistake. In the formula, the income line for the person without a paycheck shows zero, and it looks like they don't need insurance.

The reality is different. If the person who takes care of the home and the kids is gone, the family would have to pay for child care, transportation, meals, and cleaning. Insure.com's annual index estimated that a mother's unpaid work was worth $145,235 a year in 2025. Even if your number is lower, it's never zero.

To calculate it, estimate how much it would cost each year to pay someone for those tasks and use that as if it were income.

Last step: subtract what you already have

The DIME total is what your family would need. What you still need is that total minus what you already have available: savings, investment accounts, and existing life insurance.

Carlos has $15,000 in savings, plus life insurance through his job equal to one times his salary: $55,000.

A word of caution about insurance through work

The insurance your employer provides helps, but it has an important limit: it usually ends when you leave that job. Many plans give you a short window, often 31 days, to convert it or take it with you as an individual policy, almost always at a higher premium. If Carlos changes jobs and doesn't use that option, that $55,000 disappears, and what he still needs rises to $861,000.

That's why we recommend seeing insurance through work as a supplement, not as your main plan.

When to run the numbers again

Your number isn't forever. It changes when your life changes, and ideally you should review it whenever any of these things happen:

• You get married or divorced.
• A child is born or joins the family.
• You buy a home or refinance your mortgage.
• You change jobs, or your income goes up or down significantly.
• You start supporting your parents or another relative.
• You open a business or take on a large debt.

If none of that has happened, a review every two or three years is enough. At LA Castle Brokers Group, we do it with our clients at no cost, because coverage that was well calculated five years ago may fall short today.

Your next step

You now have the tool to calculate your number. If questions came up along the way, or you'd like us to review the calculation with you and your partner, we'll do it at no cost at LA Castle Brokers Group. First you understand, then you decide.