Life Insurance Calculator: How Much Life Insurance Do I Need? (2024)

Getting enough life insurance coverage is essential for ensuring your loved ones are taken care of financially if you die. A life insurance calculator is one way to figure out how much you need.

Life Insurance Calculator

An easy way to figure out your coverage needs is to use this life insurance calculator. Enter your annual income and how many years your dependents will need financial support, your debt, future college costs, funeral needs, savings and any other life insurance coverage—and you’ll get a result immediately.

How Much Life Insurance Do I Need?

How to Use Our Life Insurance Calculator

A good estimate of life insurance needs requires using a formula that includes your future financial obligations and your assets, such as savings, that your loved ones can use if you die.

To find out how much life insurance you need, follow these steps and our life insurance calculator will do the rest.

1. Enter your annual income and how many years of income you want to cover. We multiply your annual income by the number of years your loved ones will need that salary.
2. Enter your debts and future costs you want to cover. To do this, determine how much you owe or anticipate owing for financial obligations such as a mortgage, credit card debt, loans, future educational costs and funeral expenses.
3. Enter your savings and any current life insurance coverage. Now we want to subtract the assets your family would use if you passed away, like funds in a savings account, a retirement plan or another life insurance policy.
4. Results. When you use our life insurance calculator, a results page will provide an estimate of your life insurance needs along with details of what you entered.

Example of How Our Life Insurance Calculator Works

Tips for Calculating How Much Life Insurance You Need

Keep these tips in mind when deciding your life insurance needs:

• Tip No. 1: Figure out the type of life insurance you need, such as term life insurance or permanent life insurance.
• Tip No. 2: Take into account other life insurance policies, like life insurance from your employer.
• Tip No. 3: Consider other life insurance benefits like life insurance riders, which are optional add-ons to a policy for additional coverage. For example, you can customize a policy with a long-term care rider, waiver of premium rider, or accelerated death benefit rider.

How to Manually Calculate How Much Life Insurance You Need

Besides using the life insurance needs calculator, there are other ways to estimate how much life insurance you need. Here are four options.

• Option 1: Multiply your annual income by 10. This is the easiest way to to get an estimate, but this method could leave you underinsured because it doesn’t take into account factors like debts, a mortgage and future education needs of children.
• Option 2: Multiply your annual income by more than 10. Simply multiplying your annual income by a rather random number doesn’t account for your individual situation and anticipated needs and existing assets.
• Option 3: 10 times income plus $100,000 for college. If you have children with future college needs, you could multiply your income by 10 and tack on $100,000 to pay for college. But this also falls short of being a reliable method for calculating how much life insurance you need.
• Option 4: The DIME method. The DIME (Debt and final expenses; Income; Mortgage; Education) method includes more life insurance factors than simply multiplying your income and provides a rough estimate, but it doesn’t take into account savings and child care costs.

Compare Life Insurance Quotes

Once you know your life insurance needs, you can start shopping for a policy. Compare life insurance quotes from multiple companies to see which ones offer you the best price.

Life insurance rates vary from company to company, so comparing quotes online or working with an independent life insurance agent can help you find the best life insurance rates for your age and health.