Determine how much coverage you need to protect your family’s financial future.
Like any other financial product, life insurance is a deeply personal decision, and the exact amount you’ll need will depend on your individual circumstances. If you have savings, investments or an inheritance to fall back on, you may want to curtail your coverage to take these things into consideration. Think of this calculator as a guide to help you find the right coverage for your unique situation.
What’s my monthly cost for coverage?
Generally, life insurance experts suggest a number between 5 and 10 times your annual salary to make sure you can cover all of your obligations should you pass away.
How much life insurance do you need?
Answer three questions to see the coverage we recommend.
1) How much debt do you owe?
Include mortgages, credit cards, car loans, student loans and other debt.
2) How much do your loved ones need each month?
Start with how much you take home monthly, adding rent, food and necessities.
3) How many months will your loved ones need the income?
Indicate how long you think your loved ones need before they can sustain themselves in your absence
Your recommended coverage:
$50,000
Typically you'll want to add another $15,000-$20,000 for final expenses such as medical costs and funeral expenses.This life insurance coverage amount is just an estimate. Because everyone’s financial situation is different, you may want to increase or decrease your amount of coverage to meet your specific goals. Talk to a financial planner or adviser to learn more about how much life insurance coverage is best for your unique situation.
Other factors to consider
Generally, your life insurance policy should cover the gap between fulfilling your long-term financial obligations — including things like a mortgage, student loans, credit card debt and your family’s ongoing living expenses. Because this calculator doesn’t account for your savings, investments and other assets, you may want to subtract your assets from the recommended coverage amount to get a more accurate estimate of your life insurance needs.
- Age. This applies to both you and your children. If your kids are younger, factor in the costs of college tuition should you die before they’ve completed their education. If you and your partner are nearing retirement and have children who are financially independent, your living expenses may not be as high as they once were.
- Medical bills. You’ll also want to keep in mind any medical payments your family will be left with as a direct result of your death. Unfortunately, dying doesn’t come cheap, so you may want to add in $15,000 to $20,000 extra to cover your funeral, burial and related costs.
- Inflation and potential taxes. With the rate of inflation averaging around 2% each year, the coverage you buy now won’t be worth as much in 20 or 30 years. And if you live in one of the six states that impose inheritance taxes — Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — you’ll want to account any taxes your family could be stuck with.
How would life insurance fit into my monthly budget?
| Monthly expenses | monthly Cost |
|---|---|
| Term life insurance | $15 – $30 |
| Dining out | $200 |
| Health insurance | $300 |
| Cell phone bill | $100 |
| Car insurance | $120 |
| Car payment | $250 |
| Alcohol | $50 |
| Gas | $80 |
| Internet | $80 |
| Student loans | $300 |
| Credit card bill | $100 |
Typical coverage amounts
Average life insurance coverage amounts range from $50,000 for a bare-bones policy all the way up to $5 million and beyond. For the majority of policies, providers offer coverage in multiples of $50,000 up to $1 million. When you’re young and healthy, the difference between adding an extra $50,000 or $100,000 in coverage to your policy can be low.
Use our calculator to learn a recommended coverage amount, and then factor in your assets and any other expenses unique to you and your family’s circumstances. After you’ve found a number you’re comfortable with, round up to the nearest $50,000 to get a typical coverage amount.
Now that you know how much coverage you’re looking for, compare life insurance providers to find a policy that ensures your family’s taken care of — no matter what happens in the future.
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