How Much Life Insurance Do You Need?
This calculator uses a simple needs-based approach to estimate how much life insurance coverage your family would need to stay financially secure if something happened to you. It adds up income replacement, outstanding debts, and future expenses, then subtracts your existing savings and coverage.
The Needs-Based Method
Coverage needed = (Annual income × years to replace) + outstanding debts + future expenses − existing savings and coverage. This approach ensures your dependents could maintain their standard of living, pay off debts like a mortgage, and cover future costs like college tuition, without relying solely on your income.
A Simpler Rule of Thumb
Some financial advisors suggest a simpler guideline: 10-15 times your annual income. This is quicker to calculate but less precise than the needs-based method, since it doesn't account for your specific debts, dependents, or existing coverage.
Term vs. Permanent Life Insurance
Term life insurance covers you for a fixed period (like 20 or 30 years) and is usually far more affordable — a good fit for covering years when dependents rely on your income. Permanent life insurance (whole or universal life) lasts your entire life and includes a savings component, but comes at a significantly higher premium.
Frequently Asked Questions
Does this calculator give me a premium quote?
No, this calculator estimates how much coverage you need, not what it will cost. Premiums depend on your age, health, smoking status, and the insurer's underwriting — get a quote from an insurance provider for actual pricing.
Should stay-at-home parents get life insurance?
Often yes. While they may not have a salary, replacing services like childcare and household management can be costly, so many families still carry coverage for a non-working spouse.
How often should I reassess my coverage?
Review your coverage after major life events — having a child, buying a home, or a significant income change — since your needs can shift substantially over time.