How Much Life Insurance Do I Need? An Alabama Worksheet

Every online calculator gives a different answer because most of them are guessing at things only you know. Here is the version we use at the kitchen table. It takes about ten minutes and a pen.

Line 1: Income replacement

Annual take-home income x the number of years your family would need it.

Be realistic about the years. If your youngest is four, you are probably looking at fifteen to eighteen years before the household could run without your income. If your kids are grown and your spouse works, it might be five.

Example: $60,000 x 15 years = $900,000. Many families discount this somewhat because a lump sum earns interest; using 12 to 13 years instead of 15 is a reasonable adjustment.

Line 2: Debt payoff

Add the mortgage balance, car loans, credit cards, student loans, and any business debt you personally guaranteed.

Example: $215,000 mortgage + $22,000 car + $6,000 cards = $243,000.

Alabama is a common-law state, so most consumer debt does not automatically transfer to a surviving spouse — but a mortgage stays with the house, and the house has to be paid for.

Line 3: Future obligations and final expenses

• Funeral and burial: $10,000-$15,000 in Alabama
• Final medical bills: budget $5,000
• College, if you want to fund it: roughly $60,000-$100,000 per child for in-state tuition, room, and board over four years
• Childcare if a stay-at-home parent dies: $8,000-$12,000 per child per year in the Huntsville and Birmingham metros

Line 4: Subtract what already exists

• Existing individual policies
• Employer group life, discounted because it is not portable
• Liquid savings and investments actually earmarked for this
• Social Security survivor benefits, which can be meaningful for young children

Put it together

(Line 1 + Line 2 + Line 3) − Line 4 = your coverage target.

Our example family lands near $900,000 + $243,000 + $140,000 − $150,000 = roughly $1.1 million. At 35 in good health, that is real money but not shocking money — often $55-$75 a month for 20-year term.

Layering, if the number feels big

You do not need one giant policy. Stack them:

• $250,000 of 30-year term matched to the mortgage
• $500,000 of 20-year term matched to the child-rearing years
• $100,000 of permanent coverage for final expenses and legacy

Each layer expires when its job ends, so your premium drops over time instead of paying for coverage you no longer need.

Do not insure only the earner

A stay-at-home parent's replacement cost — childcare, transportation, household management — runs $45,000 to $60,000 a year in Alabama. That deserves $300,000 to $500,000 of term coverage at minimum.

Run it with us

Bring your numbers to the 90-second form and we will do this math with you on one call, then show you what each layer costs. If the answer is that you already have enough, we will say so.