Life Insurance Coverage
Free Life Insurance Coverage calculator with clear step-by-step results.
About Life Insurance Coverage
Uses the needs-based approach: clear the debts, fund the household's spending for a defined number of years, provide for education and final expenses, then subtract what already exists. It is more defensible than a salary multiple because every component can be checked and challenged.
Formulas
Total need
Need = mortgage + other debts + annual spending x years + education fund + final expenses
Cover required
Cover = total need - existing cover and liquid savings
Worked example
With the default values below, Life Insurance Coverage returns Additional life cover needed of $840,000.00. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Outstanding mortgageminimum 0 $
- 240,000 $
- Other debtsminimum 0 $
- 18,000 $
- Annual household spending to coverminimum 0 $
- 42,000 $
- Years of spending to coveraccepts 1–40
- 15
- Education fund for childrenminimum 0 $
- 60,000 $
- Existing cover and liquid savingsminimum 0 $
- 120,000 $
- Funeral and final expensesminimum 0 $
- 12,000 $
Results
- Additional life cover needed
- $840,000.00
- Total need before existing assets
- $960,000.00
- Income replacement component
- $630,000.00
- Debts as a share of the need
- 26.9% %
Step by step
- 1Values used
- 2Total need
- 3Cover required
- 4Additional life cover needed= $840,000.00
- 5Total need before existing assets= $960,000.00
- 6Income replacement component= $630,000.00
- 7Debts as a share of the need= 26.9 %
Assumptions and limits
- The result is derived only from the 7 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- Not insurance or financial advice. Appropriate cover depends on personal circumstances, tax treatment, trust arrangements and state benefits, all of which vary by jurisdiction. Consult a licensed adviser.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Not insurance or financial advice. Appropriate cover depends on personal circumstances, tax treatment, trust arrangements and state benefits, all of which vary by jurisdiction. Consult a licensed adviser.
Frequently Asked Questions
How many years of spending should I cover?
Commonly until the youngest child is financially independent, or until the surviving partner reaches pension age. Fifteen to twenty years is a frequent answer for a young family.
Should I include the mortgage if I have separate mortgage protection?
No - count it once. Enter existing mortgage protection in the existing cover field rather than removing the mortgage from the need.