If your employer offers life insurance as part of your benefits package, there's a good chance you've never thought much about it. It's there. It's free or close to it. You checked a box during onboarding and moved on.
That assumption is worth revisiting.
The Number Was Never About You
Most employer-sponsored life insurance is calculated as a multiple of salary, often one to two times your annual pay. It's a standard group benefit, built to apply evenly across an entire workforce. It was not built around your mortgage, your dependents, your spouse's income, or the number of years your family would need to replace what you bring in.
For someone earning $60,000 a year, two times salary might come close to covering a real need. For someone earning $250,000 with a mortgage, two children, and a spouse who also depends on that income, the same formula falls dramatically short.
The coverage exists. The adequacy is a separate question entirely.
What Actually Determines the Real Number
A more accurate starting point looks at a handful of factors together, not a single multiple.
Income replacement. How many years would your household need your income replaced to maintain its current path? Ten years. Fifteen. Until the youngest child is through college.
Outstanding debt. Mortgage balance, any other significant obligations that wouldn't disappear if your income did.
Dependents. Number and age. A twenty-eight-year-old parent with two young children has a very different need than someone whose kids are grown.
A second income, if there is one. Two-income households sometimes assume they're covered because there's a second earner. That earner is now covering the full cost of the household alone, often while also managing everything a second parent used to help carry.
Future obligations. College costs, care for aging parents, anything already on the horizon.
A Simple Illustration
Take a household earning $150,000 a year with a $300,000 group policy, a standard two times salary benefit. On paper, that sounds like a meaningful sum.
Multiply out ten to fifteen years of income replacement, add a remaining mortgage balance, and factor in two children who are still years from being financially independent, and the real number required to keep that household on track often lands well north of a million dollars. The gap between $300,000 and what's actually needed is where most people find themselves, without realizing it until something forces the question.
People assume "some" life insurance is enough and their family will "figure it out." But figuring it out often means real losses, pulling kids out of private school, canceling vacations, selling the house. The real question isn't whether your family survives financially. It's whether they can keep living the life you built for them, or whether your absence forces a second loss on top of the first.
This Isn't a Sales Pitch
The point here isn't that everyone needs to run out and buy a larger policy. It's that very few people have actually done the math. They've inherited a number set by an HR department and assumed it was close enough.
Knowing your real number, and how it compares to what you currently have, is simply information. What you do with that information, whether it changes anything at all, is a separate conversation. But it's a conversation that starts with knowing where you actually stand.
If you've never run this calculation for your own household, it's worth ten minutes with a calendar and a calculator before assuming the benefit you have is the coverage you need.
If you'd like to talk through what your real number looks like, learn more about me or book a time on my calendar.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 5280 CARROLL CANYON ROAD, SUITE 300, SAN DIEGO CA, 92121, 619-6846400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. WESTPAC WEALTH PARTNERS LLC is not an affiliate or subsidiary of PAS or Guardian. Insurance products offered through WestPac Wealth Partners and Insurance Services, LLC, a DBA of WestPac Wealth Partners, LLC. CA Insurance License Number - 4128269. | Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. | 9089082.1 Exp. 08/28