Calculator

Life Insurance Coverage Calculator

Estimate how much coverage your family may need using the DIME method — Debts, Income replacement, Mortgage, and Education. This is an educational starting point, not personalized financial advice.

The method behind the number

This calculator uses the needs-analysis approach that is usually taught as DIME — Debt, Income, Mortgage, Education. It adds up what your death would leave unfunded and subtracts what is already funded:

Coverage = (annual income × years to replace) + other debts + mortgage balance + education costs − existing savings and life insurance

That is the whole formula. The result is floored at zero and rounded to the nearest $1,000. It is deliberately more conservative than the “ten times your salary” rule of thumb, because ten-times-salary ignores both your mortgage and whatever you have already saved — it overinsures households with large assets and underinsures households with large debts.

Choosing the years-to-replace figure

This is the input that swings the answer most, and there is no universally right value. Three common ways to set it:

Until the youngest child is financially independent. If your youngest is four, that is roughly eighteen to twenty years. This is the most common basis for a household with dependent children.
Until your partner reaches retirement age. Appropriate where the surviving partner would struggle to return to full earnings and retirement assets are the backstop.
Long enough to restabilise. Five to seven years, where the survivor has independent earning capacity and the goal is to prevent a forced sale of the house or a forced career change during grief.

The calculator does not discount future income to present value or adjust for inflation. Those two omissions push in opposite directions and, over the fifteen-to-twenty-year horizons most households use, they broadly offset. If you want to be precise about it, an insurance professional will run a discounted needs analysis for you.

What the formula leaves out

The non-earning partner's economic contribution. Childcare, eldercare and household management have a replacement cost that this formula does not capture. Households frequently under-insure a stay-at-home parent to zero, which is rarely the right answer.
Final expenses. Funeral costs, medical bills not covered by health insurance, and estate administration. Many people add a fixed amount for this in the “other debts” field.
Survivor benefits. Social Security pays survivor benefits to eligible dependent children and to a surviving spouse caring for them. The Social Security Administration publishes the eligibility rules and an estimator; benefits you expect to receive reduce the gap this calculator is measuring.
Employer group life. Coverage through work usually ends when the job does, so counting it as permanent existing coverage is a common and expensive mistake.
Taxes. Life insurance death benefits paid to a named beneficiary are generally not subject to federal income tax, but proceeds can be included in a taxable estate depending on ownership. This matters at higher net worths and is a question for a tax professional.

The amount is only half the decision

Once you have a coverage figure, the second question is what kind of policy carries it. Level term insurance buys the largest death benefit per dollar of premium and is what most households with a temporary need — a mortgage, dependent children — actually need. Permanent policies cost several times more for the same face amount because part of the premium funds a cash value component. LIMRA's consumer research consistently finds that people overestimate the cost of term life by a wide margin, and that this overestimate is a main reason households stay uninsured. Our life insurance guide works through the difference.

Where your inputs go

Nowhere. The calculation runs entirely in your browser. Nothing you enter is transmitted to this site or stored anywhere, and there is no form submission. Financial figures you type here never leave your device.

Frequently asked questions

The most common basis is the number of years until your youngest child is financially independent. Alternatives are the years until a surviving partner reaches retirement age, or a shorter five-to-seven-year period where the survivor has independent earning capacity and the goal is simply to avoid a forced move or career change.

Be careful. Group coverage through work almost always ends when the job does, and it is rarely portable on the same terms. Counting it as permanent existing coverage is a common mistake. If you include it, revisit the number whenever you change jobs.

No, and it does not discount future income to present value either. Those two omissions push in opposite directions and broadly offset over the fifteen-to-twenty-year horizons most households use. A discounted needs analysis run by an insurance professional will be more precise.

Because life insurance is meant to fill a gap, not to duplicate assets you already hold. Money already saved is money your household would not need the policy to provide. This is why the needs-analysis result is often lower than the ten-times-salary rule of thumb for asset-rich households, and higher for households carrying a large mortgage.

Frequently yes. Childcare, eldercare and household management have a real replacement cost that this formula does not capture, and households routinely insure a non-earning partner at zero when a meaningful amount would be appropriate.

Sources

LIMRA — Insurance Barometer Study, for ownership rates and consumer cost perception.
Social Security Administration — survivor benefit eligibility and amounts.
Insurance Information Institute — life insurance ownership and needs-analysis background.