Life Insurance Needs Calculator
Life insurance is meant to replace what your family would lose if you died: your income, plus debts and future costs. This calculator uses a simple needs-based method. It adds the income your family would need for a number of years, other debts, the mortgage, education costs and final expenses, then subtracts your savings and existing cover to show the gap. It is a starting point for a conversation with a licensed adviser, not a recommendation.
How to use the life insurance needs calculator
- Enter the income your family would need to replace and for how many years.
- Add debts, the mortgage, expected education costs and final expenses.
- Enter your savings and any existing cover and read the estimated gap.
Formula
Need = income × years + other debts + mortgage + education + final expenses, and gap = need − savings − existing coverage. This is a simplified version of the “DIME” approach (Debt, Income, Mortgage, Education). It ignores inflation, investment returns and the survivor’s own earnings.
Worked examples
A worked case
$60,000 × 10 years = $600,000, plus $15,000 debts, $200,000 mortgage, $80,000 education and $15,000 final expenses gives a need of $910,000. With $50,000 savings and $100,000 existing cover, the gap is $760,000.
Already covered
If savings and existing cover exceed the need, the gap is $0.
Thinking about life insurance
Types of cover at a glance
| Type | How it works |
|---|---|
| Term | Cover for a fixed period, such as 20 years. Usually the simplest and least expensive. |
| Whole or permanent | Lifetime cover with a savings component and higher premiums. |
What the estimate leaves out
- Inflation and investment returns on the payout.
- The surviving partner’s income and any benefits.
- Employer cover that ends if you change jobs.
- Special needs, such as long-term care for a dependant.
When to revisit the number
Review it after marriage, a new child, a home purchase, a large new debt or a change in income. As debts fall and children grow up, the need usually shrinks.
Talk to a licensed professional
Policy types, health underwriting and prices are beyond a simple calculator. Use this estimate to prepare questions, and compare quotes from more than one insurer. This page is educational and is not insurance or financial advice.
Practice problems
Try these yourself first, then check your answer. The answers come from the calculator above.
- Income $80,000 for 8 years, $10,000 debts, $150,000 mortgage, $60,000 education, $12,000 final costs, $30,000 savings, $200,000 cover. What is the gap?
Show answer
Estimated coverage gap: $642,000.00 · Total financial need: $872,000.00
Common mistakes to avoid
- Forgetting to include a partner’s income and existing workplace cover.
- Using a fixed “multiple of income” without considering your own debts and goals.
- Not reviewing the amount after big life events such as a new child, a new mortgage or a career change.
Frequently asked questions
How much life insurance do I need?
It depends on your income, debts and your family’s future costs. Some advisers cite a rule of thumb of several times annual income, but a needs-based estimate like this one is usually more personal.
Should I insure a stay-at-home parent?
Often yes, because childcare and household work would have to be paid for. Include that cost as the income to replace.
Does this recommend a policy?
No. It only estimates a gap. Talk to a licensed adviser about policy types and prices.
What are final expenses?
Funeral costs and related expenses at the end of life.
Reviewed September 26, 2026 by the SolveCalcPro editorial team. Found a mistake? Tell us; see our editorial policy.