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I'm not a big fan of life insurance, but when used as a financial planning tool it can be useful. I try to avoid over-insuring, and I treat insurance as an expense for an unlikely and unexpected twist. It's not a substitute for savings, or for a retirement plan, it is a premium you pay for relaxed sleep at night.

You should familiarize yourself with the life insurance bell curve. Here is one such depiction of the curve: http://rhombusenterprise.com/northpointfinancial.com/images/...

I would cut off the first third and start with marriage/first home. As your debts fall, your savings grow, and your kids graduate from college, your insurance needs will be reduced, and so your insurance coverage should be trimmed accordingly. There is no magic formula, you just have to tailor it to what you want to leave behind as security for your survivors, and what amount you want to pay from your income for that security and peace of mind.

Do some basic math on your projected savings and debts, and calculate how much you want your survivors to have when you depart. Try to determine where you will be on the bell curve in 7 years. If you're well on the downslope, 20 years (when you are 68) may be much more than you need.

If you have a paid up 529 for your kids, then college is covered, and usually you can assume your kids will be self sufficient within a year of graduating college. The equity in your home is also part of your estate so include that in the overall security calculations. Remember too, once you're deceased your share of expenses will be buried with you, and your survivors' living expenses will go down, so factor that in. Any 401k or IRA, and any savings or other valuable assets you have all go into the estate, so add it all up and deduct any debts you owe including mortgage, loans, credit card debts, taxes, etc. Then assume a modest rate of return on your investments. Now determine the minimum amount you wish to leave for your survivors, and if that is more than your net assets, then the gap between your net assets and your wishful number is what you insure. Shop around for the best deal on the policy that covers your gap.

In my case, I was 100% debt free by early 50's, I had pre-paid college 529s to get my kids through college, and by mid 50s I had saved enough to support my family comfortably for about 20 years, so at that point I let my term life policy expire. Your plan may vary.
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