Life Insurance Needs Calculator

Calculate how much life insurance coverage you need based on income, debts, dependents, and existing coverage.

By Konstantin Iakovlev · Updated September 2026 · Source: NAIC — Life Insurance consumer guide

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Insurance Needed

$1,220,000.00

Estimated Monthly Premium

$91.50

30-yr term, age ~35

Recommended Term

15-year term

Insurance Needs Breakdown

Income Replacement$750,000.00
Mortgage Payoff$250,000.00
Outstanding Debts$15,000.00
Funeral / Final Expenses$25,000.00
College Fund$200,000.00
Total Needs$1,240,000.00

Existing Resources

Existing Life Insurance$0.00
Liquid Savings$20,000.00
Total Resources$20,000.00
Coverage Gap (Insurance Needed)$1,220,000.00

Premium Estimate Note

Estimated premium assumes about $0.90 a year per $1,000 of coverage for a healthy non-smoking 35-year-old on a 30-year term policy. Actual rates vary significantly by age, health, smoking status, and provider.

Use the Life Insurance Needs Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Figuring out how large a life insurance policy you actually need comes down to one question: what would your household have to cover if your income disappeared tomorrow? The right coverage amount keeps your family financially stable, letting them stay in their home, keep up with daily living costs, and fund a child's education without scrambling.

The engine behind this tool is the DIME method, which breaks the question into four parts: Debt, Income, Mortgage, and Education. It multiplies your annual income by the number of years you want to replace it, then adds your outstanding debts, your remaining mortgage balance, funeral and final expenses, and a college fund (the per-child amount you enter times the number of children, not adjusted for inflation). Existing life insurance and liquid savings are subtracted from that total, and what is left is the coverage gap the calculator reports as Insurance Needed.

Where many households fall short is by sizing a policy to wipe out today's debts and stopping there, leaving no cushion for inflation, unexpected medical bills, or years of ongoing support. Treat your coverage as a living number and revisit it whenever a major life event, such as a new child, a move, or a salary change, shifts the math.

Example: Sarah's Life Insurance Needs

  1. 1 Sarah earns $60,000 a year and wants it replaced for 15 years. She has a $200,000 mortgage, $15,000 in other debts and one child with a $100,000 college goal, and she keeps the calculator's $25,000 for funeral and final expenses. She has no existing life insurance and $20,000 in liquid savings.
  2. 2 Total needs: $60,000 × 15 = $900,000 of income, plus $200,000 mortgage, $15,000 debts, $25,000 final expenses and 1 × $100,000 college = $1,240,000.
  3. 3 Coverage gap: $1,240,000 − $0 existing coverage − $20,000 savings = $1,220,000, the Insurance Needed figure. Because she wants 15 years of income replaced, the calculator suggests a 20-year term.
  4. 4 Counting the $20,000 as available is a choice: if that money is her emergency fund, entering $0 savings raises the gap to $1,240,000.

Source: NAIC — Life Insurance consumer guide · Last updated: September 2026

Frequently Asked Questions

How much life insurance do I need?
A common rule is 10-15 times your annual income, but a proper needs analysis considers replacing income for dependents, paying off debts, funding college, and covering final expenses minus existing assets and survivor benefits.
Is term or whole life insurance better?
Term life is best for most people because it costs 5-15 times less than whole life for the same death benefit. A healthy 35-year-old can get a 20-year $500,000 term policy for $25-$40/month in 2026.
Do I need life insurance if I am single with no kids?
Single people without dependents usually need little or no life insurance. A small policy ($50,000-$100,000) to cover final expenses and debts may be sufficient. Lock in coverage while young if you plan to have dependents later.

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