Life Insurance Calculator
Calculate how much life insurance coverage you need using income replacement, the DIME method, and a full gap analysis. Compare term vs whole life premiums by age and health class.
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Recommended Coverage
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Income Replacement Component —
Debt Coverage Component —
Dependent Care Component —
Extended More scenarios, charts & detailed breakdown ▾
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Gross Income Need
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Net Need (minus spouse income) —
Inflation-Adjusted Total —
Professional Full parameters & maximum detail ▾
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Coverage Components
Income Replacement Need —
Total Debt Coverage —
Education Fund Need —
Final Expenses —
Summary
Gross Coverage Need —
Coverage Gap (need to buy) —
Est. Monthly Term Premium —
How to Use This Calculator
- Enter your annual income, coverage years, total debts, and dependents for a quick recommended coverage estimate.
- Use the Income Replacement tab to model inflation-adjusted income needs minus your spouse's income.
- Use the DIME Method tab for a detailed calculation: Debts + Income + Mortgage + Education.
- Use the Term vs Whole tab to compare estimated premiums for term and whole life insurance at your age and health class.
- Use the Professional tab for a full gap analysis: total need minus existing savings and current coverage, plus an estimated monthly premium.
Formula
Simple: Coverage = Income × Years + Total Debts + $10,000 × Dependents
DIME: Coverage = Debts + Income × Years Until Independent + Mortgage + Education per Child × Children
Gap = Gross Need − Existing Savings − Existing Coverage
DIME: Coverage = Debts + Income × Years Until Independent + Mortgage + Education per Child × Children
Gap = Gross Need − Existing Savings − Existing Coverage
Example
Example (DIME): $80,000 income × 18 years = $1,440,000 + $280,000 mortgage + $30,000 debts + 2 × $60,000 education = $1,870,000 gross need. Minus $40,000 spouse income × 18 = $720,000 net need. Minus $50,000 savings = $670,000 coverage gap. Est. premium at 35: ~$25/month.
Frequently Asked Questions
- A common rule of thumb is 10–12× your annual income, but a more accurate approach uses the DIME method: Debts + Income replacement + Mortgage + Education costs. For example, a family earning $80,000 with a $280,000 mortgage, 2 children, and $30,000 in other debts might need $800,000–$1.2 million in coverage.
- Term life insurance covers a set period (10, 20, or 30 years) and pays a death benefit if you die during that term. It is simple and affordable — a healthy 35-year-old can get $500,000 of 20-year term coverage for $25–$35/month. Whole life insurance covers your entire life and builds cash value, but premiums are typically 8–10× higher than term for the same coverage.
- DIME stands for Debts, Income, Mortgage, Education. Add up: all debts (except mortgage), your annual income × years until youngest child is independent, your remaining mortgage balance, and education costs for all children. This gives a comprehensive coverage target that accounts for your family's specific financial obligations.
- Yes — the higher the coverage amount, the higher the premium. However, premiums scale less than linearly, so $1 million in coverage is not twice as expensive as $500,000. The biggest factors affecting your premium are age (younger = cheaper), health class (preferred, standard, or substandard), term length, and coverage amount.
Related Calculators
Sources & References (5) ▾
- NAIC — Life Insurance Buyer's Guide — National Association of Insurance Commissioners
- Insurance Information Institute — How Much Life Insurance Do You Need? — Insurance Information Institute
- FTC — Buying Life Insurance — Federal Trade Commission
- IRS — Life Insurance Proceeds Tax Treatment (Topic 430) — Internal Revenue Service
- Department of Labor — Group Life Insurance Plans — U.S. Department of Labor