Life Insurance Calculator
What Would Your Income Actually Need to Replace?
Most life insurance shopping starts with a guess — "ten times my salary" or a round number that feels safe. The income-replacement method used here builds the figure from your actual obligations instead: how many years of income your household depends on, what debts would remain unpaid, what future costs (college, a mortgage payoff, a spouse's retirement gap) are still ahead, and what savings or existing assets would already cover part of the gap. The result is a coverage target grounded in your numbers rather than a marketing rule of thumb.
The Formula
This calculator pulls directly from the income-replacement method used by financial planners:
Income Replacement is the core of the calculation — your annual income multiplied by the number of years your dependents would need it. Outstanding debts and anticipated future expenses (college tuition, a wedding, elder care) are added on top, and existing assets or savings are subtracted since they already offset part of the need.
A Worked Example
| Component | Amount |
|---|---|
| Income Replacement ($75,000 × 10 years) | $750,000 |
| + Outstanding Debts | $20,000 |
| + Future Expenses (education, etc.) | $30,000 |
| − Existing Assets / Savings | −$15,000 |
| Coverage Needed | $785,000 |
Figures above are illustrative; substitute your own income, debt, and savings numbers in the calculator.
Where This Matters
- New policy shopping — gives you a defensible target coverage amount before you start comparing term life quotes, rather than anchoring on an arbitrary round number.
- Life changes — a new mortgage, a new child, or a paid-off debt all shift the calculation; recalculating after major changes keeps coverage aligned with actual need.
- Reviewing existing coverage — plug in your current policy face value as "existing assets" to see whether you're underinsured relative to today's obligations.
How to Use This Calculator
- Enter your annual income.
- Enter the number of years of income your dependents would need replaced (common planning horizons run 10–20 years, or until the youngest child is financially independent).
- Enter any outstanding debts you'd want covered (mortgage balance, loans), if applicable.
- Enter anticipated future expenses such as college costs, if applicable.
- Enter existing assets or savings that would already offset the need, if applicable.
- Select Calculate to see the estimated coverage amount.
Related Calculations
Once you have a target coverage figure, compare the cost of getting there with the Term vs Whole Life Calculator, or check your overall protection with the Coverage Calculator.