I’m not an insurance expert. My basic philosophy is to separate needs from wants. When I was still single I determined my goal with life insurance was simply to not be a burden on anyone else if I were to die. I just wanted my revolving debt paid off and funeral expenses covered. I rejected thoughts about a potential windfall I might “gift” the family. Likewise, when the whole life peddlers came and I was unable to determine a significant benefit vs term insurance and investing the difference, I opted for term for the flexibility and simplicity. I am confident today that was a good choice.
Now that I am married with a child I am “underinsured” when the insurance sellers look at my situation. I was told by the USAA rep I should consider $1-$2 million. I only have 500k (SGLI plus a 100k term policy) but I am happy with that. I think 5x income is reasonable advice given your house is not upside down. If need be your wife could sell the house and downsize significantly.
For me, I am happy to have enough to pay off my soon to be mortgage, leaving over half as a cushion for my wife. With minimal housing cost she would be able to support herself on a low wage part time basis if required (we will have rental income with our property).
The ability to pay off the mortgage with some combination of savings and insurance is HUGE in my opinion. If she can drastically lower the monthly cash flow requirement by retiring the mortgage, your wife will have great flexibility financially.
