4 Things That Determine the Amount of Life Insurance Coverage You Need

Financial Horizons: Insights for Building Wealth and Securing Your Legacy
By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

When it comes to purchasing life insurance, most people ask the same basic question: “How much coverage do I really need?” While the answer can vary from person to person, there are four critical financial factors that should guide your decision—and each plays a direct role in protecting the future of your family or business. Let’s break them down so you can make a well-informed decision that truly secures your legacy.

1. Your Outstanding Debts
Any remaining balances on credit cards, personal loans, auto loans, or business lines of credit will be passed on to your estate or co-signers if something happens to you. These obligations could burden your loved ones at a time when they’re emotionally and financially vulnerable. Your life insurance policy should, at minimum, cover all of your outstanding debt so your family can remain financially whole in your absence.

2. The Remaining Balance on Your Mortgage
For many households, the mortgage is the single largest monthly expense. A properly structured life insurance policy should provide enough coverage to either pay off the mortgage in full or cover the payments for a significant period. This allows your family to remain in the home without fear of foreclosure or financial instability, giving them one less thing to worry about during a time of loss.

3. The Cost of Your Children’s Education
If you have children—especially young ones—you need to factor in the future costs of their education. College tuition continues to climb, and even a modest in-state school can cost over $100,000 over four years when you factor in tuition, housing, books, and meals. Your life insurance policy should reflect these potential costs so your children don’t have to forgo their dreams due to lack of funding.

4. Your Current Income Multiplied by the Years Your Family Will Need It
This is one of the most overlooked aspects of life insurance planning. If you’re the primary earner, how many years will your spouse, children, or other dependents rely on your income to survive? Multiply your annual income by that number. That figure becomes the baseline coverage amount you should consider. For example, if your family would need your income for 10 years and you earn $100,000 annually, you should consider at least $1 million in coverage. This ensures they can maintain their lifestyle, pay the bills, and avoid financial disruption.

Going Beyond the Basics
These four financial categories are just the beginning. A comprehensive insurance strategy—especially one tied into a broader financial or tax plan—can also account for final expenses, estate taxes, charitable bequests, or even funding a buy-sell agreement if you own a business. Indexed Universal Life (IUL) insurance can provide both a death benefit and cash value accumulation, giving you more flexibility and control over your future.

When structured properly, life insurance becomes more than a safety net—it becomes a tool for legacy building, tax efficiency, and long-term peace of mind.

➡️ Learn more about your life insurance options and request a personalized review at www.thecrgroupllc.com/blog

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About the Author
Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in financial strategy, tax planning, and life insurance, Dr. Cardenas helps individuals and business owners protect their wealth and build a legacy. Learn more at www.thecrgroupllc.com.

📌 Disclosure:
This article is for educational and informational purposes only and is not intended to serve as personalized legal or investment advice. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance strategies, including Indexed Universal Life (IUL) and annuity products, may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.