Covering a household with young children
The short answer
For a household with children, the figure is driven by three things: childcare that would have to be bought, the mortgage that would still be owed, and the number of years of income that would be lost. Childcare is the component that most often gets left out, and for families with young children it is frequently the largest.
Childcare replacement is the missing line
Childcare is not a debt, so it does not appear on any statement, which is exactly why it gets skipped. But if the person providing care is no longer there, the household has to buy that care. Annual childcare cost multiplied by the years until the youngest child is self-sufficient gives the figure — and in a household with two young children, that product can exceed the mortgage.
| Component | Typical weight | Why |
|---|---|---|
| Childcare over the dependent years | Often the largest | Bought labour, multiplied across many years |
| Remaining mortgage | Large, and fixed | A known balance that does not go away |
| Income replacement | Varies with horizon chosen | Scales directly with the number of years assumed |
| Education costs | Optional, but real | Often funded explicitly rather than assumed |
| Final expenses | Small | A fixed allowance, not a scaling item |
Matching the term to the dependency
The term should run until the last child leaves the household, not until the mortgage is paid. Those two dates are rarely the same, and choosing the shorter one leaves a gap in the years when the household is carrying its heaviest load.
A 20-year term taken when the youngest child is one year old expires while that child is still at university. The policy ends precisely when the remaining obligation has years left to run.
Covering a stay-at-home parent
Where one parent is not in paid work, the household still carries the risk that the unpaid work stops. Sizing should account for what it would cost to buy that work, not treat it as zero because no salary appears on a tax return.
Review as the household changes
Another child, a refinance, a career change or a move all shift the number. Re-doing the arithmetic every few years is cheaper than carrying cover sized for a household that has since changed shape.
1. National Association of Insurance Commissioners (NAIC), consumer guidance on life insurance for families and on how households size coverage. National Association of Insurance Commissioners — reviewed 31 October 2026.
2. 2026 Insurance Barometer Study, LIMRA and Life Happens. National survey of 5,237 adult financial decision-makers, fielded January 2026. Cited for the finding that a large share of households report having less coverage than they need.
Amounts are not published on this page. Components are shown by relative weight so the guidance stays accurate as prices and childcare costs move.