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By Mario Cruz Pérez — Insurance agent licensed in 16 states (including Texas) · Last updated: November 2026
In this guide I’ll give you what actually works: the 4 numbers that come from YOUR home, not from a chart on the internet. By the end you’ll be able to sit down with pencil and paper and work out your real figure. And I’ll also tell you what gets subtracted — because that’s where almost everyone gets it wrong.
Watch the video version of this guide (in Spanish):
Why “10 times your salary” isn’t your number
Think about it this way: two men earn the same, $50,000 a year. One has rented his whole life, his kids already work, and his wife has her own career. The other signed a mortgage three years ago, has two little kids, and his wife stayed home to raise them. The 10x rule gives them both the same number. Does that make sense? Not at all.
A rule doesn’t know your home. You do. That’s why the right calculation doesn’t start with your salary — it starts with your obligations.
Before you calculate: does your family inherit your debts?
But here in Texas, a community property state, some things do carry on: what both of you signed, anything with a co-signer, and the mortgage — the mortgage stays attached to the house, not to the person.
That gets reviewed case by case, and it gets reviewed with your attorney. I’m an insurance agent, not an attorney, and I won’t tell you I am.
So why do debts top the list? Because whatever your estate spends paying debts is money your family doesn’t have to live on. That’s the point.
The 4 numbers (grab some paper)
how to calculate life insurance: the 4 numbers — debts, mortgage, income and education
Number 1: what you owe today
Number 2: your mortgage balance
And here’s the trap: almost everyone adds up these two, sees the total, gets scared, and stops there. These two are the easy ones. Where people fall short is in the two that come next.
Number 3: income — multiplied by the right number of years
How many years? That depends on your home, not on a chart:
Number 4: the education you already promised
That promise wasn’t made by a financial advisor. You made it, in your kitchen, in your own words.
And you don’t have to cover the whole degree. Put down what you already promised. If you promised they wouldn’t start their life in debt, put that down. You already made that promise — all we’re doing here is putting a number on it.
The subtraction: what you already have (careful with this part)
One: savings that are truly available. Not the house. Not the retirement account that comes with penalties if you touch it early. Cash, available tomorrow. That gets subtracted.
Two: any insurance you already have. And here’s the point that gets me the most questions every week: that Term Life you get at work, the free or almost-free Group Life… that isn’t yours. It stays at work the day the job ends. And then what do you have left? Nothing — right when you’re a few years older and qualifying costs more.
work life insurance is not yours — group life stays behind when the job ends
What’s left after that subtraction is your number.
The 10x rule vs. your 4 numbers
10 times your salary life insurance vs a real coverage calculation
Frequently asked questions
Sometimes yes, often no — and there’s no way to know without doing the math. The 10x rule is an average that ignores your debts, your mortgage, your kids’ ages and your partner’s situation. Work out the 4 numbers from your own home and compare: if the result is close, it was a coincidence; if it isn’t, the rule was leaving you short or having you overpay.
In general, individual debts are paid by the estate you leave behind, not out of your family’s pocket. But in Texas — a community property state — debts you both signed, debts with a co-signer and the mortgage (which stays attached to the house) do carry on. Every case is different: review yours with your attorney.
It counts while you have that job — and that’s the problem. Group Life stays with the company the day the job ends, right when qualifying for your own policy costs more because of your age. Subtract it from the calculation if you want, but in pencil, not in ink.
It depends on your age, your health, the type of policy and the amount that comes out of your 4-number calculation — so be wary of any price you’re quoted before someone knows your situation. The honest way to find out is to work out YOUR number first and get a quote on that real figure, not on a generic package.
Number first, vehicle second. Many families cover the years of big obligations (mortgage, kids at home) with Term because of its cost, and look at permanent pieces for what doesn’t expire. There’s no single answer — there’s a design based on your situation and a budget you can sustain.
Every time your home changes: a child is born, a house is bought, a big debt is paid off, a job changes. At a minimum, review it once a year — the math takes fifteen minutes once you know the 4 numbers.
Work out your number with someone who actually knows your home
Save this guide. The day you sit down to do the math, it will be here. And so will I.
If you’d like us to work out your number together — at no cost and no pressure — send me the word PROTEGE on WhatsApp at 346-295-9035. If you don’t use WhatsApp, call that same number (346-295-9035) and leave us a message: we’ll call you back in less than 24 hours.
Mario Cruz Pérez — Insurance agent licensed in 16 states, including Texas. 13 years helping Hispanic families in the United States protect what they love.
Disclaimer: This information is educational and does not constitute individualized legal, tax or financial advice. Mario Cruz Pérez is a licensed insurance agent; he is not an attorney or tax advisor — the treatment of debts, estates and inheritance varies case by case and should be reviewed with a legal professional. Life insurance products are subject to each carrier’s terms, conditions and approval. Coverage should be designed around what each family can sustain over time.
