Question 1

What is a coverage gap in life insurance?

Accepted Answer

A coverage gap is the difference between the amount of life insurance you currently have and the amount your family would actually need if something happened to you. For example, if your family needs $1 million in coverage based on income replacement, debts, and education costs, but you only have a $150,000 employer policy, your coverage gap is $850,000.

Question 2

How do I know if I have enough life insurance?

Accepted Answer

Calculate your recommended coverage using the 10x income rule plus outstanding debts and education costs for dependents. Then compare that to your current coverage. Most families need 10 times their income plus mortgage balance plus $50,000 per dependent for education. Employer coverage alone, which is typically 1-2x salary, is rarely enough.

Question 3

What happens if I'm underinsured?

Accepted Answer

If you are underinsured and something happens to you, your family may need to make difficult financial decisions during an already devastating time. They might need to sell the home, take on debt, withdraw retirement savings early with penalties, or significantly reduce their standard of living. Children's education plans may be derailed, and your surviving spouse may need to work multiple jobs.

Coverage Gap Checker

Do you currently have life insurance?