Life Insurance Needs Calculator
Determine the right coverage amount to protect your family's financial future.
Recommended Total Coverage
$0.00
How to Calculate Your Life Insurance Needs
Choosing a life insurance policy isn't just about picking a random round number like $500,000 or $1 million. To ensure your family is truly protected, you must account for your current lifestyle, long-term obligations, and immediate final expenses. This calculator uses a comprehensive approach similar to the DIME Method (Debts, Income, Mortgage, and Education).
Key Factors in Your Calculation
- Income Replacement: This is usually the largest component. If you earn $60,000 and want to provide for your family for 15 years, you need at least $900,000 in coverage just for this category.
- Mortgage & Debt: Your goal should be to leave your family debt-free. Including the full balance of your mortgage and car loans allows survivors to keep the home without financial strain.
- The Future of Your Children: If you have young children, consider the future cost of college or vocational training, which can exceed $100,000 per child depending on the institution.
- Current Assets: You don't need to pay for coverage you already have. Subtract your current savings, 401(k) balances, and existing employer-provided life insurance from your total need.
Realistic Example:
Let's say Sarah earns $75,000. She wants to cover 10 years of income ($750,000). She has a $200,000 mortgage and $10,000 in credit card debt. She wants to set aside $50,000 for her child's college. She currently has $40,000 in savings.
Total Need: ($750k + $200k + $10k + $50k) – $40k = $970,000.
Let's say Sarah earns $75,000. She wants to cover 10 years of income ($750,000). She has a $200,000 mortgage and $10,000 in credit card debt. She wants to set aside $50,000 for her child's college. She currently has $40,000 in savings.
Total Need: ($750k + $200k + $10k + $50k) – $40k = $970,000.
Why Coverage Gap Matters
Many people rely solely on "group life insurance" provided by their employers. While a great benefit, these policies often only cover 1x or 2x your annual salary. As shown in the example above, most families require 10x to 15x their salary to maintain their standard of living. Using this life insurance calculator helps identify the "coverage gap" between what you have and what your family actually needs.