How much permanent life insurance do you need?

A common question that can affect your loved ones

You may be thinking about the people who rely on you—or the costs you don’t want to leave behind. Questions like “Will my savings be enough?” or “Would my family have to cover expenses?” often lead to one place: how much life insurance coverage makes sense. That’s where a step-by-step approach may help you think it through.

What is permanent life insurance?

Permanent life insurance is a type of life insurance that typically:

  • May provide coverage for your lifetime, as long as premiums are paid and policy terms are met
  • Has rates that don’t usually increase
  • Includes a fixed death benefit
  • May build cash value over time, depending on the policy
  • Stays in force without expiring after a set number of years

Unlike term life insurance, which lasts for a specific period, permanent coverage can help for longer-term needs.

How permanent life insurance works

Permanent life insurance is generally designed to remain in place over time if requirements are met.

It typically includes:

  • A death benefit that may be paid to beneficiaries if a claim is approved
  • Protection that lasts for life rather than ending after a set term
  • Features that may differ from term life insurance

Because of this structure, some people prefer to use permanent coverage to help address ongoing or end-of-life financial responsibilities.

How to estimate how much life insurance to consider

A simple way to approach this is to compare what you owe or want to provide with what you already have. This can provide a general starting point for thinking about coverage.

Step 1: Add financial responsibilities

Consider:

  • Final expenses (such as funeral-related costs)
  • Mortgage or housing costs
  • Other debts
  • Everyday living expenses
  • Financial support for others

Step 2: Subtract available resources

Include:

  • Savings
  • Existing life insurance
  • Other financial assets

Step 3: Review the gap

The difference can give you a starting point when considering your potential coverage needs. One way to think about it: the goal is not a perfect number—it’s simply an estimate that reflects your situation today.

A quick rule of thumb (with limits)

Some people use a general estimate, such as an amount related to their annual income. This can be a starting point, but it may not reflect:

  • Debt levels
  • Retirement savings
  • How many people may depend on your income

That’s why a personalized estimate is often more useful.

Key factors that can shape your coverage amount

Final expenses
Coverage may help reduce the financial burden of funeral and related costs.

Housing and debts
Outstanding balances, such as a mortgage, may still need to be paid.

Income support
If someone depends on your income, coverage may help provide temporary support.

Existing savings
Savings and other assets can reduce how much additional coverage is needed.

How needs can change over time

Your coverage needs may shift depending on your situation:

  • Homeowners: Coverage may help address remaining mortgage payments
  • People supporting others: Coverage may help continue supporting loved ones for a period of time
  • Those later in life: Coverage may focus more on final expenses or leaving a financial cushion

Some ways to review coverage estimates

After estimating, ask:

  • Would this cover final expenses?
  • Are major debts included?
  • Would it ease the financial impact on others?

Permanent vs. term life insurance: a simple comparison

  • Term life insurance: Coverage for a specific period
  • Permanent life insurance: Coverage that may last for your lifetime

One way to think about it: term may fit temporary needs, while permanent may fit longer-term planning.

Is a smaller policy enough?

A lower coverage amount may help with focused needs like final expenses or smaller debts. Whether it’s enough may depend on:

  • Your financial responsibilities
  • Your available resources
  • Whether others depend on your income

What affects eligibility and costs

Eligibility and costs depend on factors such as:

  • Age
  • Gender
  • Health information
  • Other information like prescription history or medical information
  • Coverage amount

Approval is based on underwriting standards and is not guaranteed.

What the coverage can help with

If a claim is approved, beneficiaries may use the death benefit for:

  • Final expenses
  • Outstanding debts
  • Daily living costs

Pros and considerations

Potential advantages

  • Coverage that may last a lifetime
  • Fixed death benefit
  • Intended for long-term needs

Important considerations

  • Coverage depends on ongoing premium payments
  • Costs may differ from term life insurance
  • Approval depends on application details and other information

FAQs

What is the right amount of life insurance?
It depends on your financial responsibilities, goals, and available resources.

How do you go about determining how much permanent life insurance you need?
The amount varies based on your situation. The step-by-step estimate above can help you consider your options.

Is permanent life insurance lifelong?
It may provide coverage for life if policy requirements are met.

Can health conditions affect eligibility?
Yes. Health and other information are part of the application and may affect approval.

Key takeaway

The right coverage amount is personal. A simple estimate based on your financial responsibilities and resources can help you better understand your coverage needs today.

This article is provided by New York Life Insurance Company for informational purposes only. This article is not intended to provide tax, legal, financial or accounting advice. Please consult your own professional for advice specific to your circumstances.



How AARP Permanent Life Insurance from New York Life fits

AARP Permanent Life Insurance from New York Life is a type of permanent life insurance that:

  • Can last as long as you live
  • Has rates that will never increase for any reason
  • Includes a fixed death benefit
  • Does not expire after a set term

Coverage is available up to program limits, depending on eligibility and state availability. Because of these limits, this coverage may be considered for situations involving:

  • Final expenses
  • Smaller financial obligations
  • Supplementing other coverage