Life Insurance Calculator
Calculate how much life insurance coverage you need to protect your family.
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Frequently Asked Questions
How much life insurance do I need?
A common rule of thumb is 10-12x your annual income. For more precision use the DIME method: Debt + Income (years needed x annual income) + Mortgage + Education. A $80,000 earner with $300,000 mortgage, $80,000 education costs and 20-year need = approximately $1,980,000 in coverage. Subtract existing savings and any current coverage to find the gap.
Term vs whole life insurance: which is better?
Term life insurance is almost always the better financial choice for most people. A 20-year $1M term policy for a healthy 35-year-old costs $40-$60/month. The same coverage in whole life costs $600-$900/month. The standard advice: buy term and invest the difference. Whole life can make sense in very specific estate planning scenarios for high-net-worth individuals.
When should I buy life insurance?
Buy as early as possible — premiums are lowest when you are young and healthy. Key life triggers: marriage, having children, buying a home, starting a business, or becoming someone primary breadwinner. Do not wait for health issues to develop. A 30-year-old in good health pays 50-70% less than a 45-year-old for the same coverage. Lock in low rates while you can.
How much life insurance: the DIME method with numbers
The right amount replaces what the family would lose: the income, the debts that need clearing, and the future costs the income would have paid. DIME stands for Debt, Income, Mortgage, Education. The quick rule of 10 times income is a starting point that fits some families and misses badly for others.
| Household | Debt | Income replacement | Mortgage | Education | Total need | 10x income rule |
|---|---|---|---|---|---|---|
| Earner, $75,000, two children under 10, $300,000 mortgage | $20,000 | $75,000 x 15 years = $1,125,000 | $300,000 | $200,000 | $1,645,000 | $750,000 |
| Earner, $120,000, one teen, $150,000 mortgage | $10,000 | $120,000 x 8 years = $960,000 | $150,000 | $120,000 | $1,240,000 | $1,200,000 |
| Single, no dependents, $20,000 of debt | $20,000 | $0 | $0 | $0 | $20,000 plus final expenses | $0 to $500,000, mostly unneeded |
| Stay-at-home parent, two young children | $0 | Child care and household services, $40,000 x 10 years = $400,000 | $0 | $0 | $400,000 | $0 by the rule, which is wrong |
Income replacement years run until the youngest child is independent or the surviving spouse would reach retirement. Subtract existing savings, existing policies and the survivor's own income from the total.
Worked example and what it costs
The first household needs about $1.65 million. Existing assets: $80,000 of savings, a $150,000 group policy through work, and the spouse earns $40,000 a year, which over 15 years covers $600,000 of the income replacement. Net need: about $800,000. A 20 year level term policy for $800,000 on a healthy 35 year old non-smoker cost about $40 to $55 a month in 2026 (men pay a little more than women). The same coverage as whole life would be roughly 10 to 15 times that premium.
Term versus permanent
Term insurance covers a fixed period (10, 20 or 30 years) and is the right product for the need above, which ends when the children are grown and the mortgage is paid. Whole life and universal life last for life, build cash value slowly, and cost far more; they make sense for estate planning above the exemption, special needs dependents, or business buyouts, not for income replacement. Buying a 30 year term at 30 locks in the lowest rate of your life; the premium does not rise, and the policy can be dropped when it is no longer needed.
Group coverage through work
Employer policies of one to two times salary are useful but not enough and not portable: they end with the job. Treat them as a supplement to a personally owned term policy, not a replacement. Supplemental group coverage above the free amount is often priced for the average employee and can cost more than an individual policy for a healthy applicant.
Things that change the premium
Age and health class (preferred plus, preferred, standard), tobacco in the last 12 months (roughly double the premium), BMI, blood pressure and cholesterol from the medical exam, family history of heart disease or cancer before 60, driving record, and hazardous hobbies. Coverage amounts are priced in bands: $500,000 and $1,000,000 often cost less per thousand than $450,000 or $900,000, so quote the round number above your need.