Life Insurance Needs Calculator

Figure out exactly how much life insurance coverage your family would actually need. This isn't a generic rule of thumb; it's a number based on your real income, debts, and goals. Works in any currency, just enter your numbers.

How Much Life Insurance Do You Actually Need?

Most people have heard the old rule of thumb: "buy coverage worth 10 times your income." It's easy to remember, but it's really just a guess. It doesn't ask whether you have a mortgage, how many kids depend on you, or whether your spouse already has savings to fall back on. Two people earning the same salary can need very different amounts of coverage.

The honest answer is: your life insurance need is whatever it would take for your family to keep living the life they're used to, without your income, for as long as they'd need help. That's a specific number, and it's calculable. That's exactly what this tool does.

How This Calculator Works

This uses a version of what insurance planners call the "needs-based" method. Instead of a flat multiple of your income, it adds up everything your family would actually need money for, then subtracts what they already have. Here's what each part means:

Income replacement

This is usually the biggest piece. It's your annual income multiplied by the number of years your family would need that income replaced, for example until your youngest child is financially independent or until your spouse reaches retirement age.

Debts and mortgage

Add up anything you'd want paid off completely: your mortgage balance, car loans, personal loans, credit card balances. Clearing these removes a huge financial burden from your family during an already hard time.

Future education costs

If you have children, this is a rough estimate of what you'd want set aside for their schooling later on. If this doesn't apply to you, leave it at 0.

Final expenses

Funerals and burials cost more than most people expect. A reasonable placeholder is included, but adjust it based on typical costs where you live.

What gets subtracted

Any savings, investments, or existing life insurance your family could already rely on reduce how much new coverage you need. There's no point paying for coverage you don't need.

A Quick Example

Say a 35-year-old earns $60,000 a year, has a $150,000 mortgage balance, and has two young children who are at least 15 years from being financially independent. They have $10,000 in savings and no existing life insurance.

• Income replacement: $60,000 × 15 years = $900,000
• Debts: $150,000
• Final expenses: $15,000
• Subtotal: $1,065,000
• Minus existing savings: −$10,000
• Recommended coverage: $1,055,000

That's a very different number from the "10x income" rule of thumb, which would have suggested just $600,000. That's well short of what this family would actually need.

Common Mistakes People Make

• Using a flat multiple of income. It ignores your actual debts, dependents, and goals.
• Forgetting about a stay-at-home parent. If one partner doesn't earn a salary, their loss still has a real financial cost: childcare alone can be expensive to replace.
• Only insuring the mortgage. Mortgage protection is a good start, but it ignores ongoing living expenses and your children's future costs.
• Not revisiting the number. A new child, a new mortgage, or a pay raise all change how much coverage makes sense. Recalculate every few years.
• Assuming workplace coverage is enough. Employer-provided life insurance is usually only one to two times your salary. It's a helpful start, but rarely the full picture.

Frequently Asked Questions