Life Insurance Needs Calculator
Calculate the right amount of life insurance coverage based on your income, debts, dependents, and existing assets.
Most people either guess at their life insurance number or take whatever their HR department defaulted them to, which is usually far too little. The right number depends on what you are actually trying to replace: your income stream, your debts, your kids' future education costs, and the one-time expenses that come with death. Running the calculation takes five minutes and produces a defensible number you can shop against.
The common "10x income" rule is a rough starting point but misses individual circumstances entirely. Someone with a $400,000 mortgage, three kids, and minimal savings needs more than 10x income. Someone with substantial assets and no mortgage may need less. Calculate your actual need rather than multiplying by a rule of thumb.
The DIME method
DIME stands for Debt, Income, Mortgage, Education. Add up these four categories to get a defensible coverage number. Debt: all non-mortgage debt you want cleared. Income: annual income multiplied by years of replacement needed. Mortgage: remaining balance. Education: estimated cost of college for each child. Subtract existing assets and current coverage from the total. This calculator uses the same framework with final expenses added.
Term vs whole life
Term life insurance provides coverage for a specific period at a fixed premium. A 20-year term policy on a 35-year-old covers the years when the financial need is greatest: children at home, mortgage outstanding, income not yet replaced by retirement savings. When the term ends, the children are grown, the mortgage is near paid off, and retirement savings can cover the surviving spouse. Whole life combines insurance with a cash value investment component. The premiums are dramatically higher for the same death benefit. Most financial planners recommend term insurance for the coverage and separate investments for wealth building.
How much does term life insurance cost?
A healthy 35-year-old male can get a $500,000 20-year term policy for roughly $25-35/month. A healthy 35-year-old female pays slightly less, around $20-28/month. Premiums increase significantly with age and health conditions. Getting coverage while young and healthy is substantially cheaper than waiting.
Frequently asked questions
Does stay-at-home spouse need life insurance?
Yes. The economic value of childcare, home management, and household services replaced by a stay-at-home parent is substantial. Replacing full-time childcare alone can cost $30,000-60,000 per year. A policy sized to cover this replacement cost for the years while children are young is appropriate.
How do I compare life insurance quotes?
Compare term length, face amount, and premium from at least three carriers. Check the carrier's financial strength rating (AM Best A or better). Understand whether the policy is guaranteed renewable and whether premiums are level for the full term. Online comparison sites (Policygenius, Term4Sale) allow comparison across multiple carriers simultaneously.