Life Insurance Calculator
Calculate how much life insurance coverage you need using multiple methods. Protect your family's financial future with the right amount of coverage.
Income Replacement Method
Calculate coverage based on replacing your income for a set number of years
Coverage Recommendation
Recommended Coverage
$1,183,280
Total Income Needs
$1,233,280
Existing Assets
-$50,000
Simple Multiplier (20x income)
$1,500,000
Coverage Gap
$1,183,280
Method Comparison
Income Replacement
$1,183,280
Focus: Replace lost income
Debt Coverage
$555,000
Focus: Pay off obligations
DIME Method
$2,400,000
Focus: Comprehensive coverage
Consider the average of these methods or choose based on your family's specific needs
Understanding Life Insurance Needs
Who Needs Life Insurance?
- • Parents with dependent children
- • Primary income earners in a household
- • Business owners and partners
- • Anyone with debt others would inherit
- • Homeowners with a mortgage
- • Those wanting to leave an inheritance
What Life Insurance Covers
- • Income replacement for dependents
- • Mortgage and debt payoff
- • Children's education costs
- • Final expenses (funeral, medical)
- • Estate taxes and settlement
- • Business continuity
Calculation Methods Explained
Income Replacement
Multiplies your annual income by the number of years your family would need support. Common multiples are 10-15x income. Accounts for inflation and existing assets.
Debt Coverage
Adds up all debts (mortgage, loans, credit cards) plus future needs (education, emergency fund, final expenses). Ensures family won't inherit financial burden.
DIME Method
Comprehensive formula: Debt (5 years of payments) + Income (until retirement) + Mortgage + Education. Most thorough but may result in highest coverage amount.
Types of Life Insurance
Term Life Insurance
- • Coverage for a specific period (10, 20, 30 years)
- • Most affordable option
- • No cash value accumulation
- • Best for temporary needs (mortgage, children)
- • Renewable but premiums increase with age
Permanent Life Insurance
- • Coverage for your entire life
- • Higher premiums than term
- • Builds cash value over time
- • Types: Whole life, Universal, Variable
- • Good for estate planning, lifetime needs
Coverage Rules of Thumb
10x
Minimum income multiple
Basic coverage
12-15x
Recommended range
Most families
20x
Young families
Small children
5-10x
Older adults
Near retirement
Frequently Asked Questions
How often should I review my coverage?
Review your life insurance annually or whenever you experience major life changes: marriage, divorce, new child, new home purchase, salary increase, or paying off significant debts.
Should I get insurance through my employer?
Employer coverage (usually 1-2x salary) is a good start but rarely sufficient. It also ends when you leave the job. Consider supplementing with personal coverage that you own and control.
What affects life insurance premiums?
Age (younger = cheaper), health status, smoking, family medical history, occupation hazards, hobbies (skydiving, etc.), coverage amount, and policy type. Term is significantly cheaper than permanent.
Do stay-at-home parents need coverage?
Yes! The economic value of childcare, household management, and other services is significant. Calculate what it would cost to replace these services — often $40,000-$80,000+ per year.
Getting the Right Coverage
- • Start early: Younger age means lower premiums locked in longer
- • Be honest: Misrepresentation can void your policy
- • Compare quotes: Rates vary significantly between insurers
- • Consider laddering: Multiple policies with different terms
- • Name beneficiaries: Keep designations current
- • Review regularly: Life changes mean coverage needs change