“How much life insurance do I need?” is usually answered with a multiplier — ten times your income, or eight, depending on who is doing the talking. Multipliers are fine as a sanity check. They are a poor place to start, because they ignore the two things that actually determine the number: what you owe, and who would have to keep paying it.
Around here, both of those are local questions. So let’s use local numbers.
Start with the gap between income and housing
Benton County’s median household income is $93,506 in 2024 dollars. The county’s median owner-occupied home value is $323,500. Inside Bentonville, the median home value is $428,500.
Set those side by side and the shape of the problem is clear. The median home in this county costs several times what the median household earns in a year, and inside Bentonville the gap is wider still. That is not a criticism of anybody’s finances — it is just what a growing market looks like, and it is the reality most families here bought into.
Now ask the question that a life insurance policy exists to answer. If one income disappeared tomorrow, does the house survive it?
For a two-income household that stretched to buy in Bentonville, the honest answer is often no — not without selling, moving, and changing schools in the same year. For a single-earner household it is more clear-cut.
That is the starting number. Not a multiplier. The mortgage balance you would want gone.
Then add the obligations that outlive you
Once the house is handled, work through the rest in plain terms.
Other debt. Vehicle loans, credit balances, a student loan that is not federal and does not discharge, anything co-signed. These land on whoever is left.
Income replacement for a defined window. Not forever — a window. How many years would the surviving household need at the current standard of living to get stable? Common answers are the number of years until the youngest child finishes school, or five to ten years for a spouse to retrain and re-establish. Multiply the income being replaced by those years.
Childcare and the second-order costs. If the person who died did school pickup, cooking and the after-school shuffle, someone gets paid to do some of that now. Households routinely undercount this, and it is one of the reasons stay-at-home parents are underinsured relative to their actual economic contribution.
Education, if that is a commitment you have made. A number you choose, per child.
Final expenses. Funeral, burial or cremation, medical bills, estate settlement costs. It is a real line item and it arrives immediately, before any other money moves.
Then subtract what already exists. Savings and retirement accounts that would be liquidated. Existing policies. Social Security survivor benefits, if minor children are involved.
What is left is your number. It is arithmetic, not a rule of thumb, and it usually lands somewhere a multiplier would not have.
Term is almost always the right tool for this part
Most of what you just added up is temporary. The mortgage amortizes. The kids grow up and stop needing childcare. The window during which your absence would be financially catastrophic has a beginning and an end.
Term insurance matches that shape. You buy a level amount for a level period — 10, 15, 20, 30 years — and the premium is a fraction of what permanent coverage costs for the same face amount. That is the whole argument for it: it puts the coverage where the risk is and does not charge you for the decades where the risk has faded.
Two practical notes.
Match the term to the obligation, not to a round number. If you have 22 years left on the mortgage and a seven-year-old, a 20-year term leaves a gap and a 30-year term is a good fit. Pick the length off your actual timeline.
Look for convertibility. A convertible term policy lets you exchange some or all of it for permanent coverage later without a new medical exam. That is a valuable option if your health changes and you decide at 55 that you want something that does not expire. It usually costs little or nothing to have that provision in place, and it costs everything not to have it if your health changes.
Do not count on the policy from work
Employer-provided group life is a genuine benefit, and it is usually a multiple of salary — one or two times, sometimes three. Against the housing numbers above, one or two times salary does not retire a mortgage in this county, let alone in Bentonville.
It also has a feature people forget: it generally ends when the employment does. Layoffs, a move to a new company, a health event that ends your ability to work — the moment your income stops is often the same moment your coverage stops. Treat group coverage as a supplement to a policy you own, not as the plan.
After 65, the question changes
Benton County is 14.5% persons 65 years and over, and that is a meaningfully different conversation from the one above.
By then, the mortgage is often paid or nearly so. The kids are grown. There is no income to replace, because retirement income comes from Social Security, savings and pensions that do not stop when you do — or that stop in ways a life insurance policy was never designed to fix. Sizing a large term policy against a paycheck that no longer exists is solving the wrong problem.
What is actually on the table at that stage is usually three things.
Final expenses. A funeral, burial or cremation, and the medical and administrative bills that follow a death. A modest permanent policy, often sold as final expense coverage, covers this without your family drawing from savings or passing a collection plate. Underwriting is typically simplified, and some versions ask no medical questions at all.
Not leaving a mess. Estate settlement takes time, and cash is what makes it painless. Life insurance proceeds usually pass directly to a named beneficiary and arrive quickly, which is different from anything tied up in probate.
Legacy, if that is your intent. Leaving something to grandchildren, a church, or a cause. A permanent policy is one of the more efficient ways to create a specific dollar amount for a specific person.
There is also a surviving-spouse question worth asking out loud: when one spouse dies, some household income can go away — a pension election, one of the two Social Security checks — while property taxes, insurance and utilities on the house do not change. A policy can bridge that.
A short list to check this year
- Pull your mortgage balance and compare it to the death benefit you own today.
- Confirm what your employer coverage actually is, and whether it is portable.
- Check the beneficiaries on every policy and retirement account. Marriages, divorces and births make old designations wrong, and the beneficiary form beats the will.
- If you own term, note the year it expires and whether it is convertible.
Come talk it through
Sizing a policy takes one conversation and a few honest numbers — what you owe on the house, who depends on your income, and how long they would need. Joe has been doing this for 38 years and holds the ChFC, CLU and LUTCF designations, which mostly means he will ask about the math before he mentions a product.
Call the Bentonville office at (479) 855-6107 or stop in. If it turns out you already have enough coverage, we will tell you that and you can get on with your day.