Life Insurance Calculator
How much life insurance you need: income replacement, mortgage, debts and education, less savings and existing cover, with the DIME rule.
How to Use Life Insurance Calculator
- 1Choose where you live, so the figures and wording match (life insurance in the US, life cover in the UK).
- 2Enter the yearly income your family would need without you, and for how many years, for example until your youngest child is 18 or leaves education.
- 3Add your mortgage, other debts, the number of children and what you'd want to set aside for each one's education.
- 4Enter savings your family could use and any life cover you already have, including cover through work.
- 5Read the cover you may need, the breakdown behind it, the term that would fit, and two quick rules of thumb for comparison.
Frequently Asked Questions
How much life insurance do I need?
Add up what your family would need and take off what's already there. For $60,000 a year for 18 years (about $917,500 as a lump sum earning 2% above inflation), a $250,000 mortgage, $10,000 of debts, $50,000 for each of two children and $15,000 of final expenses, the need is about $1.29 million. With $20,000 of savings, that's about $1.27 million of cover.
What is the DIME method?
DIME adds Debts (including final expenses), Income × the years it's needed, the Mortgage and Education. It's simple but ignores what the payout earns while it's spent, so it comes out higher: $1,455,000 in the example above. The calculator shows both.
Is 10 times my salary enough?
It's a quick rule of thumb, not a plan. For the family above it gives $600,000, less than half the need once the mortgage and education are counted. For a single person with no dependants, it can be far more than needed.
How long should a term life policy last?
Long enough to cover the years your family would depend on your income or until the mortgage is paid, whichever is later. If those differ a lot, two policies of different lengths can cost less than one long policy, as cover then falls when needs do.
What's the difference between level and decreasing term cover in the UK?
Level term pays the same amount whenever you die within the term; decreasing term falls roughly in line with a repayment mortgage, so it's cheaper but only suits clearing that debt. Family income benefit pays a monthly income instead of a lump sum. Writing a policy in trust can keep the payout out of your estate.
Does a stay-at-home parent need life insurance?
Often, yes. If they died, the family would need to pay for childcare and running the home. Enter the yearly cost of that as the income to replace, for the years until the children are older.
About Life Insurance Calculator
This life insurance calculator estimates how much cover your family would need if you died: the income they'd lose, turned into a lump sum that allows for what it earns while it's spent, plus the mortgage, other debts, education and final expenses, less savings and cover you already have.
It suggests a term to match the years of support or the mortgage, and compares the result with the DIME method and the 10-times-income rule. It works in dollars, pounds or any currency, with US and UK wording.
It doesn't quote prices: premiums depend on your age, health, smoking and the insurer. Use the figure as a starting point to compare policies or speak to a broker.