If you have dependents—or loved ones who you want taken care of after you die—life insurance is critical. This coverage helps ensure your lost income doesn’t translate to tangible material losses for your family once you’re gone.

But how much life insurance is enough? The answer can change over time, and it’s important to answer correctly. You may be underinsured with life insurance coverage if…

1. Your only life insurance coverage is through your employer.

While some life insurance is certainly better than none at all, if your only coverage is through your employer, you may not have enough. Employer plans generally offer very limited coverage (like a year’s worth of your salary, maybe two), which is unlikely to be enough to meet your family’s needs if you have any significant debts or children whose college educations you’re hoping to help fund.

Furthermore, life insurance offered through your employer is usually contingent on you keeping your job, so if you leave your position for any reason, the coverage ends.

Finally, buying an individual policy gives you access to different types of life insurance policies, including permanent life insurance, which has living benefits you can use while you’re alive.

2. Your income went up.

Getting a raise is almost always a good thing, but if you’re making significantly more income today than when you first bought your life insurance policy, you may find yourself underinsured. A higher income usually comes with associated lifestyle changes, and learning how to live with less is likely the last thing your loved ones will want to do if you depart unexpectedly.

3. Your stay-at-home spouse doesn't have life insurance.

If your stay-at-home spouse doesn’t have life insurance coverage, you’ll want to consider purchasing a policy. Even if he or she doesn’t have an income that would need replacing, valuable services like childcare would need to be paid for if something happened.

4. You had a child.

As every parent knows, having a child is expensive—in fact, a Lending Tree study shows that in 2023, raising a child costs more than $21,000 per year on average. (And that’s before you factor in college.)

All of which is to say, if you’re a new parent or you brought an additional child into your family, it’s a good time to review your life insurance coverage and ensure you have enough to meet your dependents’ long-term needs, including food, shelter and education, until they’re of age. Given the high cost of childcare (and the precarious financial position of an underinsured single parent), even one child can increase your life insurance needs significantly.

5. You bought a new home.

Paying the mortgage is one of the most pressing financial needs for any family—and more pressing, still, for a newly widowed spouse. If you purchased a new home since you first got your life insurance policy, you may find that you need more coverage to help ensure your loved ones can successfully pay down that debt. After all, moving is never fun, especially in the face of a tragic loss.

While it can feel overwhelming to determine how much life insurance coverage you need as your financial situation changes over time, it’s also well within your power to ensure you’re sufficiently covered. Your representative can easily conduct a quick needs assessment to identify how much coverage you need.

It’s worth your time. Because a half hour of work today can translate to years’ worth of financial stability in the future.

How can Catholic Financial Life help?

Our life insurance experts can help you identify any gaps in your coverage and ensure your protection is always up to date. Contact your advisor today or speak with a member of our Insurance Solutions team today at (800) 965-2547.

^{Sources: Life Happens. Used with permission}