Determine exactly how much coverage your family needs for a secure future.
Recommended Coverage Amount
How Much Life Insurance Do You Really Need?
Choosing a life insurance policy isn't just about picking a random round number like $500,000. It is a strategic financial decision designed to protect your loved ones from financial hardship in your absence. This calculator uses a comprehensive approach to determine the gap between your family's future needs and your current resources.
The DIME Method Explained
Financial planners often recommend the DIME formula, which covers four critical areas:
Debt: Includes your mortgage, car loans, and credit card balances.
Income: How many years of your salary would your family need to maintain their standard of living?
Mortgage: Ensuring the family home is paid off entirely.
Education: Providing for your children's future college or university tuition.
Calculation Example
Category
Example Amount
Income Replacement ($70k x 10 yrs)
$700,000
Mortgage & Car Debt
$350,000
Education Fund (2 Kids)
$150,000
Minus Existing Savings
-$50,000
Total Insurance Needed
$1,150,000
Why Accuracy Matters
Underestimating your life insurance needs can leave your family unable to stay in their home or fund their education. Conversely, over-insuring may lead to unnecessarily high monthly premiums. Use this tool to find the "Goldilocks" zone for your specific family dynamics.
function calculateLifeInsurance() {
var income = parseFloat(document.getElementById('annualIncome').value) || 0;
var years = parseFloat(document.getElementById('yearsReplacement').value) || 0;
var debt = parseFloat(document.getElementById('totalDebt').value) || 0;
var funeral = parseFloat(document.getElementById('funeralExpenses').value) || 0;
var education = parseFloat(document.getElementById('educationFund').value) || 0;
var assets = parseFloat(document.getElementById('currentAssets').value) || 0;
var incomeNeed = income * years;
var totalNeed = incomeNeed + debt + funeral + education;
var finalResult = totalNeed – assets;
if (finalResult < 0) {
finalResult = 0;
}
var resultArea = document.getElementById('resultArea');
var coverageResult = document.getElementById('coverageResult');
var breakdownText = document.getElementById('breakdownText');
resultArea.style.display = 'block';
// Formatting currency
var formattedResult = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
}).format(finalResult);
coverageResult.innerHTML = formattedResult;
breakdownText.innerHTML = "Total Obligations: " + new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }).format(totalNeed) +
" minus current assets of " + new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }).format(assets) + ".";
// Scroll to result
resultArea.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}