Life Insurance Calculator

Use our free life insurance calculator to estimate how much your life insurance plan will provide to your loved ones.

Matthew Jones Matthew Jones Writer and Editor
Jeff Hoyt Jeff Hoyt Editor in Chief

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How Much Life Insurance Do You Need?

Life insurance gives you peace of mind knowing that one or more dependents will have greater financial security when you pass on. How much you need in a life insurance plan will depend on a variety of factors, including but not limited to:

  • The number of beneficiaries on your policy
  • How much your beneficiaries need in supplementary income
  • How long your beneficiaries need funds
  • Your budget for life insurance premiums

To make the process easier, we offer a free life insurance calculator that shows exactly how far life insurance would go for your loved ones.

How to Use Our Life Insurance Calculator

Our free life insurance calculator requires you to know a few pieces of information upfront, and you can customize different details to see what works best for your beneficiaries. This is especially useful if you’re shopping for a new life insurance policy and want to know how much coverage you’ll need.

Pro Tip:

Pro Tip: Afraid of being disqualified for life insurance based on your health? Check out our guide to the best life insurance for seniors without medical exams!

To use our life insurance calculator, you’ll provide some basic information about you and your income as well as how much you anticipate in immediate and long-term needs. Finally, you’ll need to include any additional resources that can complement the life insurance benefits. Below is a breakdown of the information you’ll need and some tips for getting the most accurate results:

Age, Income, and Assumptions

  • Current annual income
  • Spouse’s annual income (if applicable)
  • Spouse’s current age (if applicable)
  • Spouse’s desired retirement age (if applicable)
  • Investment return
  • Anticipated inflation rate

Our calculator works on the assumption that you’re taking out a life insurance policy on yourself to provide for a primary beneficiary — typically a spouse. However, this person doesn’t have to be a spouse. Anyone important in your life can be designated as your primary beneficiary. Simply input the relevant information for your primary beneficiary in the boxes designated for spouses.

FYI:

FYI: Unsure what kind of life insurance you need? Check out our guides on the best whole life insurance and best term life insurance to learn more!

Your investment return is often a fixed interest rate linked to your life insurance policy. However, not all insurance policies grow, and some do not grow at a fixed rate. You’ll need to check the policy terms to better understand how to fill in this information.

Lastly, inflation rates change from year to year. That said, the U.S. Bureau of Labor Statistics has calculated an average annual inflation rate of 3.43% over the last 40 years.[/tips]

Immediate Cash Needs

  • Anticipated funeral expenses
  • Final expenses
  • Mortgage balance
  • Other debts

The immediate cash needs refer to the expenses that your family or loved ones will need to pay off in the days and weeks following your death. Funeral expenses and final expenses are often lumped together, but for this calculator, the latter includes any final medical or legal expenses (excluding funeral costs). You may have a fixed amount that you’d like to spend on your funeral, or you may base the cost on average funeral costs in your state. Nationwide funeral costs average between $5,000 and 2$9,000.1 If you have a balance on your mortgage or other debts that have not been paid, your life insurance benefits will usually pay these off first.

Long-Term Income Needs

  • Desired annual income needs
  • Number of years of income needed
  • College needs (if applicable)

Life insurance is a great way to help your family pay for your funeral and final expenses, but many people also use the funds to provide financial stability to their loved ones. Consider speaking with your loved ones or a financial advisor to find out how much income they would need to live comfortably, and for how long. If you want your life insurance to help pay for a family member’s education, you can also input the approximate college expenses in our calculator.

Available Resources

  • Investment assets
  • Existing life insurance
  • Social Security benefits
  • Ages of children under 18 (if applicable)

Here is where you put all of the most important financial data. If you have retirement savings, they can be used to help your beneficiaries when you pass. Inputting the value of an existing life insurance policy will help determine if you have sufficient life insurance for the needs of your beneficiaries, or if there would be a shortfall in the future without more insurance. Providing your Social Security benefits and ages of children only applies if you have children under the age of 18 who could qualify for survivor benefits.

Citations
  1. U.S. Bureau of Labor Statistics. (2023). CPI for All Urban Consumers (CPI-U).

  2. USA Today. (2023). How much does a funeral cost in 2023?

Written By:
Matthew Jones
Writer and Editor
Matthew is a freelance writer who has written on a wide range of topics, from personal finance to nutrition. Over the past three years, Matthew has worked extensively on articles and guides for seniors related to Medicare, insurance, and finance…. Learn More About Matthew Jones
Reviewed By:
Jeff Hoyt
Editor in Chief
As Editor-in-Chief of the personal finance site MoneyTips.com, Jeff produced hundreds of articles on the subject of retirement, including preventing identity theft, minimizing taxes, investing successfully, preparing for retirement medical costs, protecting your credit score, and making your money last… Learn More About Jeff Hoyt
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