Life insurance calculator: How much coverage should you have?

There isn't a one-size-fits-all answer, but you can estimate the amount of life insurance you need by gathering some information. Calculating your life insurance needs starts with determining how much your loved ones would need (and for how long) if you passed away. Our life insurance calculator lets you compare different scenarios to calculate the death benefit amount that suits your life and priorities.

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How much life insurance do I need?

To estimate your life insurance needs, subtract the total value of your available assets from your long-term financial obligations:

Financial obligations over time – Assets = Life insurance coverage amount

Your calculated life insurance coverage amount should roughly match the financial gap your loved ones would face over time if you were to pass away. The policy you purchase should have a death benefit of at least this amount, if you can afford it. With term life insurance, you can typically choose a coverage amount starting at $100,000 and up, depending on your budget and what you qualify for.

Remember to consider how long your loved ones will need support in addition to how much support they will need. Here's another way to think about it: Multiply their annual financial gap after your death by the number of years you think they'd need help with that gap.

Pro tip:

Some policies allow for a life insurance annuity payout, which distributes the death benefit over time rather than all at once. The unpaid benefit will earn interest until it's fully paid out.

Now let's break down the two factors in the life insurance coverage amount equation: financial obligations and assets.

Financial obligations to consider when calculating your life insurance needs

What counts as a financial obligation in the life insurance amount equation? A financial obligation includes any financial debt or responsibility you owe another party that will be passed on to your loved ones if you die.

Consider how much of the financial obligation you'd like to support your loved ones with via life insurance. For example, you can determine how much life insurance you'd need to:

  • Replace your current income: Consider the current income your family relies on that would be gone if you were to unexpectedly pass away.

  • Cover your mortgage: The money your life insurance provides can help your family continue making mortgage payments or pay off the mortgage entirely.

  • Cover other debt: This includes private loans and credit card debt that may be passed on to your loved ones if you die.

  • Pay for ongoing child expenses: The average cost of raising a child born in 2015 is $233,610, according to the USDA. That doesn't include the cost of college. A life insurance payout can help provide for your children while they're still dependent.

  • Pay for your end-of-life expenses: According to the National Funeral Directors Association, the median cost of a funeral with a viewing and burial in 2021 was $7,848. A funeral with a cremation was only slightly less. Life insurance can help make sure your final expenses aren't a burden to your loved ones. Calculate your funeral expenses to help determine how much coverage you need.

  • Make a legacy gift and financial cushion: Do you want to leave an inheritance? By using life insurance in your estate planning, you can get enough coverage to increase your family's savings when you pass. Or you can designate a favorite organization, such as a charity, as a beneficiary.

Assets to consider when calculating your life insurance needs:

In the life insurance amount equation, an asset is anything of monetary value that your loved ones will own, benefit from, or have use of to generate income, such as:

  • Savings and investments: The money accrued in personal bank accounts, stocks, bonds, mutual funds, or any inheritance received

  • Retirement savings: Money invested for retirement, usually through an employer or other organization (IRAs, 401(k) plans, Social Security)

  • Existing life insurance policies: Any current policies that will be paid out if something happens to you

Keep in mind that the life insurance amount equation (financial obligations – assets = coverage amount) is a simplified way to consider how much coverage you need. The right amount for you ultimately also depends on your budget and priorities. Use our life insurance calculator to get a more detailed calculation and to consider different scenarios.

How to use the life insurance calculator

Since considering all your financial obligations and assets can get complicated, this life insurance calculator is designed help you organize the information and compare your options.

Start by entering your annual income, your family's income (if there are multiple earners), family size, and the immediate and long-term expenses you'd like your life insurance to cover. The life insurance calculator will retain the values you initially enter once you've submitted it.

To compare different scenarios, simply adjust the values and resubmit your changes. You'll see a revised life insurance calculation. You may also wish to consult your financial advisor to determine which scenario makes the most sense for you and your family.*

*This calculator is for illustrative and educational purposes only. Its accuracy and applicability to your circumstances are not guaranteed. You may wish to speak with a financial advisor regarding your particular circumstances.

FAQ: Life insurance needs

Browse these common questions that come up when estimating how much life insurance you should get.

What types of life insurance are available?

There are two main life insurance categories: term and whole life. A term life policy is more affordable because it has an end date, with term lengths usually ranging from 10 to 30 years. There's even a new one-year term policy. Permanent life insurance lasts for your entire lifetime, no matter when you buy it. If you're considering permanent life insurance, you have several options: whole life, universal life, and final expense insurance.

Explore the different types of life insurance to see which fits your unique needs.

How long should you have life insurance?

How long your life insurance should last will depend on factors such as your age, income, debt, budget, and if you have dependents. For example, if you have young children or a mortgage, consider a policy that lasts until your children are grown or your home is paid off so your loved ones aren't left with a major financial burden if they were to lose your income.

When should you get life insurance?

Generally, the younger you are, the lower your rate will be, so getting life insurance in your 20s often gets you the best rate. But healthy people often qualify for affordable policies even when they're older. Learn more about the ideal time to get life insurance.

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Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.