Life Policy Calculator
How much life insurance is enough is an arithmetic question before it is a shopping question. This calculator answers the arithmetic: it replaces the income your family would lose, adds your outstanding debts and a support fund for each dependent, then subtracts the savings you already have, and shows every line of that sum so you can argue with any of it.
Life Policy Calculator
Recommended coverage from income, debts, dependents and savings
Quick Answer
On the prefilled example ($50,000 income, 2 dependents, $100,000 of debts, 10 years of income replacement, $20,000 of savings) the recommended coverage is $630,000: $500,000 of income replacement, plus $100,000 to clear the debts, plus a $50,000 dependent support fund, minus the $20,000 already saved. The tool prices nothing: it sizes the policy, and the premium is a separate underwriting question it deliberately does not guess at.
Key takeaways
- Coverage = (income \u00d7 years of replacement) + debts + ($25,000 \u00d7 dependents) \u2212 savings, floored at zero.
- Every dollar of the answer sits on its own line in the results, so you can challenge the inputs instead of trusting a single unexplained figure.
- There is no premium estimate anywhere in this tool. Any version of this page quoting a monthly price for it is inventing numbers.
- Clearing the years field, or typing zero, silently loads 10 years. Everything else you clear simply counts as zero.
How to use the life policy calculator
Enter five numbers and read four lines back. The whole model fits in one formula, so the skill is in honest inputs, not in working the form.
- Annual income. The gross pay your household depends on. This is the only field the tool insists on: zero, blank or text all stop the run with a prompt to enter a valid income.
- Number of dependents. Each one adds a flat $25,000 support fund. The amount is the same for a baby and a seventeen-year-old, which is a simplification to keep in mind, not a needs assessment per child.
- Outstanding debts. One lump sum covering everything you would want gone, mortgage included. Add the mortgage, car loan, student debt and cards together yourself, because the tool never asks for them separately.
- Years of income replacement. How long the payout should stand in for your pay. Ten years is prefilled and is the horizon most needs analyses start from; longer horizons suit younger children, shorter ones suit households near retirement.
- Current savings. Money your family could already use, subtracted from the total. If savings exceed the whole need, the recommendation floors at $0 rather than going negative, while the component lines still show what the need was.
Read the badge under the headline figure as a sanity check: it restates the recommendation as a multiple of the income you entered ($630,000 is 12.6 times $50,000 on the worked example). Multiples far outside the familiar 10 to 15 times income planning band usually mean an input deserves a second look, a large debt load or a very long replacement horizon being the honest exceptions.
The coverage formula, line by line
The formula is a plain needs sum with no discounting, no inflation and no investment growth anywhere in it. That plainness is its strength and its boundary.
Income Replacement Needed = Annual Income \u00d7 Years of Income Replacement
Dependent Support Fund = Number of Dependents \u00d7 $25,000
Debt Coverage = Outstanding Debts, passed straight through
Recommended Coverage = max(0, Income Replacement + Debt Coverage + Dependent Support Fund \u2212 Current Savings)
This is the needs-based method in its simplest clothing: add up what your death would cost the household, subtract what the household already has. It sits close to the DIME method (Debt, Income, Mortgage, Education) that many advisers teach, with two structural differences worth naming. DIME splits the mortgage and future education into their own lines; this tool folds all debts into one line and replaces the education line with the flat $25,000 per dependent. And neither DIME nor this tool says anything about price. Federal guidance points the same way: the Social Security Administration frames survivor protection around replacing income for dependents, and its survivor benefits are the baseline layer this kind of private coverage sits on top of.
Worked example: where the $630,000 comes from
Each bar is one line of the prefilled run, drawn to scale against the income replacement line. Change any input above and the same four lines rebuild the total.
Income replacement $500,000
Debt coverage $100,000
Dependent fund $50,000
Less savings \u2212$20,000
| Scenario (income / dependents / debts / years / savings) | Income replacement | Dependent fund | Recommended coverage |
|---|---|---|---|
| Prefilled: $50,000 / 2 / $100,000 / 10 / $20,000 | $500,000 | $50,000 | $630,000 |
| Higher earner: $90,000 / 2 / $250,000 / 15 / $0 | $1,350,000 | $50,000 | $1,650,000 |
| No debts, no dependents: $60,000 / 0 / $0 / 10 / $0 | $600,000 | $0 | $600,000 |
| Savings cover the need: $30,000 / 0 / $0 / 5 / $999,999 | $150,000 | $0 | $0 (floored) |
The second row corrects a figure this page used to publish. The old text priced the $90,000, two-child, $250,000-debt example at "approximately $1.6 million" by adding income replacement and mortgage only. Run honestly through the tool, the dependent fund adds another $50,000 and the answer is $1,650,000. Small omissions like that are exactly why a coverage number should always be shown as a sum of lines rather than a lone headline.
What competing calculators miss
The strongest rival pages are genuinely good, and each still leaves a gap this page is built to close.
- DIME tools (a2zcalc, DG Life Group) split debt, mortgage and education into separate fields and explain the method well. Their education line, though, quietly multiplies an annual cost by children by years, which can dwarf everything else, and neither shows a per-dependent fund you can sanity-check at a glance. This tool's flat $25,000 per dependent is cruder, and it says so.
- Quick-estimate tools (SimplyInsurance and similar) lead with the 10 to 20 times income rule. A multiple is a fine starting guess and a poor finish: it ignores your actual debts and your actual savings, the two lines that move this tool's answer most after income itself.
- Cost-teasing tools blend the coverage answer with premium talk and agent funnels. The old version of this very page did it too, quoting $45 to $90 a month for a tool that contains no age, health or policy-term input and computes no price at all. A premium without underwriting inputs is marketing, not mathematics.
- The gap this page fills: a coverage figure with its working shown, its simplifications named on the page, and a hard line between sizing a policy and pricing one.
What this calculator does not do
Four limits follow directly from the formula, and each one matters before you buy anything.
- No premium, ever. Age, health, smoking, policy type and term length drive real prices, and none of them is an input here. Get the coverage size from this page, then get prices from quotes.
- No time value. Ten years of income is added as ten flat annual incomes. A payout invested by your family would earn returns, and inflation would erode it; the tool models neither, so treat the answer as a round planning figure, not an actuarial one.
- No existing coverage line. Only savings are subtracted. Employer group cover or an existing policy should be subtracted by hand from the recommendation, or added into the savings figure as a rough equivalent.
- No final-expenses or education lines. Funeral costs and college funds are not separate inputs. If those goals matter to you, add them into the debts figure before you run the tool, and read the result as covering them.
Coverage size also interacts with the policy type you eventually buy. Term cover rents protection for the years your dependents need it, while a permanent life insurance calculator explores policies built to stay in force for life with cash value attached. Households later in their working years face a different version of the same question, and the over-50 life insurance calculator covers the smaller, final-expense-led policies common after 50. A general insurance life calculator covers the broader life insurance picture for households weighing several policy questions at once.
Term life: the usual fit for this number
Buys the full recommended amount for a fixed window, typically while children are young and the mortgage is live. Lowest cost per dollar of coverage, no cash value, and the cover ends when the term does.
Permanent life: a different job
Whole and universal policies stay in force for life and build cash value, at a far higher price per dollar. They suit estate and lifelong-dependent needs more than raw income replacement at this scale.
Frequently asked questions
It adds four things: your income multiplied by the years of replacement you choose, your outstanding debts in full, and $25,000 for each dependent, then subtracts your current savings. On the prefilled example that is $500,000 plus $100,000 plus $50,000 minus $20,000, giving $630,000.
Because the formula uses one flat support allowance per dependent, regardless of age or plans. It is a deliberate simplification, not a costing of any individual child: a family funding college for three teenagers should treat that line as a floor and add education money into the debts figure.
No. There is no premium output and no input that could support one: no age, no health or smoking questions, no policy type or term length. The tool sizes the coverage only. Any monthly price has to come from an insurer quote built on underwriting.
The recommendation floors at $0 instead of going negative, while the income, debt and dependent lines still display the underlying need. A $0 result means your existing savings already cover the need as this model defines it, not that insurance is pointless for every goal.
The years field falls back to 10 whenever it is blank or set to zero, matching the prefilled default. Every other value is used exactly as typed, including fractions such as 7.5 years, so check the field shows the horizon you actually intend before you calculate.
Yes. The debts field is a single lump sum for everything you would want cleared, and for most households the mortgage is the largest part of it. Add mortgage, vehicle, student and card balances together and enter the total.
The 10 times rule is this tool with the years set to 10 and every other field at zero: a starting guess that ignores debts and savings. DIME itemises debt, income, mortgage and education separately, while this tool folds all debts into one line and uses the flat $25,000 dependent fund instead of an education line.
After any change that moves an input: a new child, a house purchase or paid-off mortgage, a significant pay rise, or a savings balance that has grown or been spent. The calculation takes under a minute, and coverage bought years ago was sized for a household that may no longer exist.
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References
- National Association of Insurance Commissioners. Life Insurance Buyer's Guide. Accessed October 22, 2026.
- National Association of Insurance Commissioners. Understanding Life Insurance. Accessed October 22, 2026.
- Social Security Administration. Survivors Benefits. Accessed October 22, 2026.
- Social Security Administration. Survivors Benefits (Publication No. 05-10084). Accessed October 22, 2026.
- Financial Industry Regulatory Authority (FINRA). Insurance. Accessed October 22, 2026.
- Internal Revenue Service. Life Insurance and Disability Insurance Proceeds. Accessed October 22, 2026.
- U.S. Department of Veterans Affairs. Life insurance for Veterans and service members. Accessed October 22, 2026.
- American Council of Life Insurers. Life Insurers Fact Book. Accessed October 22, 2026.
- LIMRA. 2024 Insurance Barometer Study. Accessed October 22, 2026.