Life Insurance Needs Calculator
Determine exactly how much coverage your family needs to stay financially secure.
Estimated Life Insurance Need
How Much Life Insurance Coverage Is Enough?
Choosing a life insurance policy isn't about picking a random number like "$500,000" or "$1 million." It is about a calculated assessment of your family's future financial obligations. This calculator uses the DIME method (Debt, Income, Mortgage, Education) to ensure your beneficiaries can maintain their lifestyle in your absence.
The Components of Your Insurance Need
- Income Replacement: This is usually the largest component. If you earn $60,000 and want to provide for your family for 20 years, you need $1.2 million just for income replacement.
- Mortgage & Debt: One of the greatest gifts you can leave is a debt-free home. Including your mortgage balance ensures your family doesn't have to move.
- Future Obligations: Consider the rising costs of college tuition for children and immediate end-of-life expenses like funeral costs, which now average between $7,000 and $12,000.
- Existing Assets: Subtract your current liquid savings and any employer-sponsored group life insurance to find the "gap" that a personal policy needs to fill.
Example Calculation
Imagine Sarah, who earns $75,000 annually. She has 2 children and 15 years left on a $300,000 mortgage. Her calculation might look like this:
– Income Replacement ($75k x 15 years): $1,125,000
– Mortgage: $300,000
– Education Fund: $100,000
– Funeral/Final Costs: $15,000
– Less Savings: ($50,000)
Total Coverage Needed: $1,490,000
Why You Should Re-evaluate Regularly
Life insurance is not a "set it and forget it" product. Major life events—marriage, the birth of a child, buying a new home, or receiving a significant promotion—should trigger a recalculation. Our calculator helps you stay ahead of these changes to ensure your safety net never has holes.