By the Lapera Insurance Team · Reviewed by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394)
You know you should have life insurance. The part nobody makes easy is the number. Too little and your family sells the house in year two. Too much and you pay for years for coverage you never needed. This guide walks the math the way we walk it across the desk in our Grayslake office: a quick rule of thumb, a better method, a worked example for a Lake County family, and the Illinois rules that shape the answer.
A common rule of thumb is 10 to 15 times the earner's gross income, but a better answer adds up what your family would actually need: debts and final expenses, years of income, the mortgage, and education (the DIME method), then subtracts savings and coverage you already own. Families with young children and a mortgage often land above the rule of thumb. A stay-at-home parent needs coverage too.
Here is the honest starting point: there is no correct number printed anywhere. There is only your family's number, and it depends on who relies on your income, what you owe, and what you want finished if you are not here to finish it. The good news is that the math is not hard. It is addition and subtraction, done carefully, with a few Illinois details layered on top. Once you have a number you trust, getting a quote is the easy part.
Why Do So Many Families End Up With the Wrong Amount of Life Insurance?
TL;DR: Most families either skip coverage because they assume it costs more than it does, or buy a round number that was never checked against what the family would actually need.
You are not alone if you have put this off. The 2026 Insurance Barometer Study from LIMRA and Life Happens found that about half of American adults (52%) own life insurance, a figure that has barely moved in years. Combining people who say they need coverage and do not have it with policyholders who say they need more, Life Happens counts 99 million adults who could use help getting properly covered (June 2026).
The reasons are human. In the same study, perceived cost was the top reason people gave for not having coverage (45%), followed by other financial priorities (35%), confusion over what kind to buy or how (23%), and simple procrastination (23%). Cost topping that list matters, because Life Happens has also reported that younger adults tend to overestimate what a basic policy costs. Many families are guessing high and then doing nothing.
The other failure is quieter: a family that bought a round number years ago, maybe $250,000 because it sounded like a lot, and never checked it against a mortgage, two kids and a salary that has since grown. That is the gap this guide is built to close.
Lapera Insurance Agency is a Farmers Insurance agency at 530 Barron Blvd in Grayslake, Illinois. Our team has served Illinois families since 1993, with over 40 years of combined experience, and our agency owner completed advanced training through The American College of Financial Services. Life insurance quoting at our agency is handled by a dedicated, licensed team member. Every guide on this site is reviewed by a licensed Illinois agent before it publishes. This article is general information, not financial, tax or legal advice.
Does the 10-Times-Income Rule of Thumb Actually Work?
TL;DR: It is a reasonable first sketch, but it ignores your mortgage, the ages of your children, your savings and any coverage you already have, so treat it as a starting range rather than an answer.
The rule of thumb you have probably heard is some multiple of income. Life Happens, the nonprofit consumer education group, describes it as multiplying your gross income by 10 to 15, and optionally adding $100,000 for each child's college education (page reviewed September 2026). It is a rule of thumb, not advice, and it is useful for one thing: getting you into the right neighborhood in thirty seconds.
Where it breaks down:
- It ignores the mortgage. Two families earning the same salary, one renting and one with a $300,000 mortgage, get the same answer from the multiple. They should not.
- It ignores time. A parent whose youngest is two needs to replace income for far longer than a parent whose youngest is sixteen.
- It ignores what you already have. Savings, existing policies and group life through work all reduce the gap. The multiple counts none of them.
- It gives the stay-at-home parent zero. Ten times no paycheck is nothing, yet replacing that parent's work costs real money, as we show below.
- The range is wide. On an $85,000 salary, 10 to 15 times is $850,000 to $1,275,000. That is a $425,000 spread, which is a lot of premium to guess about.
How Does the DIME Method Calculate Life Insurance Needs?
TL;DR: DIME adds four needs, debt and final expenses, income, mortgage and education, then subtracts the savings and coverage you already have, leaving the gap a new policy should fill.
DIME is a common planning framework, and it is the method we use when we sit down with a family. It forces you to name each need instead of multiplying a salary. The letters stand for the four things a death benefit usually has to pay for, and the last step, subtraction, is the one most online calculators skip.
| DIME piece | What goes in it | Count it? |
|---|---|---|
| D: Debt and final expenses | Car loans, credit cards, student loans you co-signed, plus funeral costs and the expenses of settling an estate | Yes, in full |
| I: Income | The income your family would lose, multiplied by the years they would need it, usually until the youngest child is independent | Yes, the largest piece |
| M: Mortgage | The balance needed to pay off the home, or enough to keep making payments, so the family is not forced to move | Yes |
| E: Education | College or training costs you want funded no matter what happens | Your choice |
| Minus: savings and investments | Money your family could actually use, not retirement accounts you want left alone | Subtract carefully |
| Minus: existing coverage | Individual policies you own, and group life through work, which may end if you change jobs | Do not over-rely on group life |
A few judgment calls sit inside that table. Retirement accounts can be left out of the subtraction if you want them to stay retirement money for the surviving spouse. Group life through work can be subtracted, but only if you are comfortable betting the job lasts as long as the need. And the income line can be adjusted: some families trim it because the earner's own spending and taxes disappear, others raise it to allow for inflation.
What Should an Illinois Family Count When Adding Up the Need?
TL;DR: Count the mortgage, childcare, college, final expenses, other debts and the surviving spouse's retirement gap, then subtract savings, existing coverage and any Social Security survivor benefits.
Here are the line items that move the number most, with the best published figures we could find for each. Treat every figure as a benchmark from a named source, not a prediction for your family.
The mortgage
Often the single biggest debt. Decide whether to pay it off or keep paying it. Your home policy protects the house itself; see our Illinois home insurance guide.
Childcare
The U.S. Department of Labor found 2022 prices for full-day care for one child ranging from $6,552 to $15,600 a year, 8.9% to 16% of median family income (Women's Bureau, 2024).
College
Average total cost of attendance for first-time, full-time undergraduates living on campus was $27,100 a year at public four-year schools and $58,600 at private nonprofits in 2022 to 2023 (NCES).
Final expenses
The median cost of a funeral with casket and burial was $8,300, and $6,280 with cremation, in the National Funeral Directors Association's 2023 General Price List Study (released December 2023; as reported by funeral trade publisher Kates-Boylston, since the study is no longer posted on nfda.org).
Other debts
Car loans, credit cards and any loan you co-signed. A surviving spouse on one income should not be carrying two incomes' worth of payments.
The retirement gap
When an earner dies, the 401(k) contributions and employer match stop too. Some families add a lump sum so the surviving spouse's retirement stays on track.
Then subtract what would already arrive. Social Security pays survivor benefits to eligible families: according to the Social Security Administration (April 2026), a surviving spouse may get benefits at any age while caring for the worker's child younger than 16, unmarried children younger than 18 (up to 19 if still in elementary or secondary school full time) may qualify, and a surviving spouse can get reduced benefits as early as age 60 (50 for a surviving spouse with a disability). There is also a one-time $255 payment to an eligible spouse or child, if the worker had enough work credits. Your Social Security Statement, available through a my Social Security account, includes survivor benefit estimates.
Social Security survivor benefits for a parent caring for young children generally stop when the youngest turns 16, and reduced widow or widower benefits do not start until 60 at the earliest (50 for a surviving spouse with a disability) (SSA). For a surviving spouse in their forties, that can leave years with no benefit at all. Your life insurance number is what bridges that stretch.
What Does the Math Look Like for a Lake County Family?
TL;DR: For an illustrative Lake County family with two young children and a mortgage, DIME points to roughly $1.75 million on the earner, well above the rule-of-thumb range.
Numbers make this real, so here is a worked example. Every figure below is illustrative. It is not a recommendation for your family, and there are no premiums in it, because life insurance pricing depends on your age and health.
Picture a couple in a Lake County suburb. One parent, 37, earns $85,000. The other, 35, is home with their children, ages 2 and 5. They owe $290,000 on a mortgage with 26 years left, $14,000 on a car loan and $6,000 on a credit card. They have $45,000 in savings outside retirement accounts, and the earner has group life through work equal to one year's salary. D: $20,000 of debt plus a $15,000 final expense budget = $35,000. I: $85,000 a year for 16 years, until the youngest turns 18 = $1,360,000. M: $290,000. E: four years at the NCES public four-year average of $27,100, for two children = $216,800. Total need: $1,901,800. Minus $45,000 of savings and $85,000 of group life = a gap of about $1,771,800, or $1,856,800 if they choose not to count the group life. They round to $1.75 million and look at a term that outlasts the 26-year mortgage. These figures are illustrative only and are not a quote or a recommendation.
Compare that with the rule of thumb. Ten to 15 times $85,000, plus $100,000 per child, lands between $1,050,000 and $1,475,000. The DIME number is higher because this family has young children, a long mortgage and a college goal. A family with teenagers and a paid-down house would see the opposite: DIME would come in under the multiple.
Notice what the example leaves out on purpose. It does not grow the payout at an investment return, it does not raise the income line for inflation, and it does not subtract Social Security survivor benefits. Those push in different directions, and a licensed agent can help you decide which to include. The point is a defensible number, not a perfect one.
How Much Life Insurance Does a Stay-at-Home Parent Need?
TL;DR: Enough to pay for the childcare, household work and schedule flexibility the surviving parent would suddenly have to buy, usually until the youngest child is in school or older.
This is the gap we see most often. The earning parent has a policy; the parent at home has little or nothing, because there is no paycheck to multiply. But if that parent died, the working parent would need full-day childcare, before and after school care, help with the house, and probably a lighter work schedule for a while.
Start with childcare, the piece with the best data. The Department of Labor put 2022 full-day care prices for one child between $6,552 and $15,600 a year. In our illustrative family, assume about $28,000 a year for two children and household help until the youngest is 12, ten years, which comes to $280,000. Add the same $15,000 final expense budget, and the stay-at-home parent's gap is roughly $295,000 before any adjustment. Again, illustrative only.
It is usually simpler to size both policies at once, because the numbers depend on each other. If the stay-at-home parent returns to work later, the policy can be reviewed then. What you do not want is to discover the gap after it matters.
Is Life Insurance Through Work Enough for an Illinois Family?
TL;DR: Usually not on its own, because group life is often a modest amount, many smaller employers do not offer it at all, and it generally ends when the job does.
Group life through an employer is a real benefit, and you should count it. But it has limits. According to the Bureau of Labor Statistics (March 2025 data), 42% of private industry workers at establishments with fewer than 100 workers had access to life insurance plans, compared with 72% at establishments with 100 to 499 workers and 87% at establishments with 500 or more. If you work for a small Lake County business, there may be nothing to count.
- It is often a modest amount. Many plans pay a flat amount or a small multiple of salary, which rarely covers a mortgage plus years of income.
- It usually ends when you leave. A layoff, a job change or retirement can end the coverage, sometimes when you are older and more expensive to insure on your own.
- It is not yours to design. You cannot pick the term length or match the coverage to your mortgage.
- Count it, but do not lean on it. We run the numbers both ways, with and without group life, so you can see how exposed you are if the job changes.
What Illinois Rules Should You Know Before You Buy?
TL;DR: The buyer's guide you must receive and the Illinois estate tax both matter, and the guaranty association limit is worth knowing but should never drive which insurer you choose.
The guaranty association has a limit. If a member insurer becomes insolvent and is ordered liquidated, the Illinois Life and Health Insurance Guaranty Association generally provides up to $300,000 in life insurance death benefits and up to $100,000 in cash surrender or withdrawal values, with an aggregate of $300,000 in benefits with respect to any one life, under 215 ILCS 5/531.03 (2025 Illinois Compiled Statutes). Most family needs, like the $1.75 million in our example, run well past that, which is one more reason the association should not factor into your choice of insurer.
Just as important: the same Illinois law, 215 ILCS 5/531.19, prohibits insurers and agents from using the existence of the guaranty association to sell insurance, and says you should not rely on it when choosing an insurer. We mention it so you know the limit exists, not as a reason to buy anything.
You generally get a buyer's guide before you pay. Under Illinois rules, the insurer generally must give applicants a Buyer's Guide before accepting the initial premium, and a Policy Summary (or, for an illustrated policy, the illustration) with or before delivery of the policy (50 Ill. Adm. Code 930.50). Read both. They are the best check that the policy you are buying matches the number you calculated.
Large numbers meet the Illinois estate tax. The Illinois Attorney General states the Illinois estate tax exclusion amount is $4,000,000. A death benefit on a policy you own can count toward your estate, so a paid-down home, retirement accounts and a large policy can add up faster than families expect. Our Illinois life insurance guide explains why, and an Illinois estate planning attorney can advise on ownership.
How Long Should Coverage Last, and When Should You Recheck It?
TL;DR: Choose a term that outlasts the longer of your mortgage and your youngest child's path to independence, then rerun the math at every major life event.
Once you have the amount, the length follows from the same facts. Look at the two clocks in your household: the years left on the mortgage, and the years until your youngest is supporting themselves. The term should outlast the longer of the two. In the illustrative family above, a 26-year mortgage points to a 30-year term rather than a 20-year term that would end with the balance still owed.
- Term life fits most families with a need that has an end date, and it is priced to match. Common terms are 10, 20 and 30 years.
- Whole life lasts for life with level premiums and costs substantially more for the same death benefit. It fits narrower goals, such as a lifelong dependent.
- Smaller whole life policies, often called final expense coverage, are designed around funeral and end-of-life costs rather than income replacement.
- Two policies can fit better than one. Some families pair a larger shorter term with a smaller longer one, so coverage steps down as the mortgage and the kids' needs shrink.
We write life insurance through Farmers New World Life. For how term and permanent coverage compare and what moves the price, our Illinois life insurance guide covers types and cost in detail, so we will not repeat it here.
Rerun the number when life changes. Your number is a snapshot. The DIME inputs change every time your life does, so the review should happen on the same schedule:
- A new baby adds years to the income line and another education goal.
- A new or refinanced home changes the mortgage line, sometimes by hundreds of thousands of dollars.
- A raise or a job change changes the income line and may end or change your group life.
- Marriage or divorce changes who depends on you, and should trigger a beneficiary review the same week.
- A paid-off mortgage or grown children can mean you need less, which is good news worth confirming.
- A stay-at-home parent returning to work changes both parents' numbers.
Life insurance protects your family's income; the rest of the household plan protects what you own. The Illinois personal umbrella guide covers the liability that can threaten savings, our article on whether to bundle home and auto insurance in Illinois covers the other policies most families review at the same time, and our life insurance page explains how we help. When you have a number, start a life insurance quote request.
The Bottom Line
The right life insurance amount for an Illinois family is not a multiple someone quoted you. It is the sum of what your family would need, debts and final expenses, years of income, the mortgage and education, minus what you already have. For families with young children and a mortgage, that number is often higher than the 10 to 15 times income rule of thumb, and the parent at home needs a number too.
Match the term to the longer of your mortgage and your youngest child's path to independence, remember that group life through work can end with the job, and rerun the math whenever your life changes. When you have a number you trust, start a life insurance quote request and a licensed team member in our Grayslake office will follow up.
Related Questions
How much life insurance do I need if I make $100,000 a year?
The 10 to 15 times income rule of thumb described by Life Happens suggests $1 million to $1.5 million, but it is only a starting range. Add your mortgage, debts, final expenses and college goals, subtract savings and existing coverage, and adjust for how many years your family would need your income. Young children and a large mortgage usually push the number higher.
What is the DIME method for life insurance?
DIME is a planning framework that adds four needs: debt and final expenses, income replacement for the years your family would need it, the mortgage balance, and education costs. You then subtract savings and coverage you already own. The result is the coverage gap a new policy should fill, which is usually more accurate than a simple multiple of salary.
Does a stay-at-home parent need life insurance?
Yes. If a stay-at-home parent died, the surviving parent would need to pay for childcare, household help and often a lighter work schedule. The Department of Labor found 2022 full-day childcare prices for one child ranging from $6,552 to $15,600 a year, so the cost of replacing that work over several years can reach hundreds of thousands of dollars.
Is life insurance through my employer enough?
Usually not on its own. Group life is often a flat amount or a small multiple of salary, and it generally ends when you leave the job. Bureau of Labor Statistics data for March 2025 show only 42% of private industry workers at establishments with fewer than 100 workers had access to life insurance plans at all.
How long should my term life insurance last?
Long enough to outlast the need. Look at the years left on your mortgage and the years until your youngest child is independent, and choose a term that covers the longer of the two. A family with a 26-year mortgage and a toddler, for example, would typically look at a 30-year term rather than a 20-year term.
What is the Illinois guaranty association limit for life insurance?
Under 215 ILCS 5/531.03, the Illinois Life and Health Insurance Guaranty Association generally covers up to $300,000 in life insurance death benefits and $100,000 in cash surrender values if a member insurer is found insolvent and ordered liquidated, with a $300,000 aggregate per life. Illinois law bars using the association to sell insurance, so choose an insurer on its own financial strength.
Last reviewed September 2026 by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394). Figures verified against the sources linked above on that date.