Life Insurance Calculator

Most financial planners recommend using the DIME method: sum your Debts (non-mortgage), Income replacement need, Mortgage balance, and Education costs for children. Subtract existing coverage and savings. The result is your coverage gap. As a quick rule of thumb, 10-12x your annual income is a reasonable starting point.

Term life insurance is pure protection for a defined period (10, 20, or 30 years) and is far more affordable. Whole life combines insurance with a savings component and costs 5-15x more. Most financial experts recommend term for the majority of people, investing the premium difference in low-cost index funds.

DIME stands for Debt (excluding mortgage), Income replacement, Mortgage, and Education. Sum all non-mortgage debts, multiply your income by the years you want to replace it, add the remaining mortgage balance, and add expected college costs per child.

Typically your spouse or domestic partner, followed by children as contingent beneficiaries. Keep beneficiary designations updated after major life events (marriage, divorce, birth of a child). Note that beneficiary designations override your will.

Age, health class, tobacco use, gender, coverage amount, policy term, occupation, and driving history all affect premiums. Younger and healthier applicants pay significantly less. Preferred Plus rates are roughly 30% lower than Standard rates.

Review coverage after major life events: marriage, divorce, having children, buying a home, significant income changes, or retirement. Your need typically decreases as you pay down debts and build savings over time.

Policy laddering means purchasing 2-3 smaller policies with different term lengths rather than one large long-term policy. Because shorter-term coverage is cheaper per dollar, you pay lower total premiums while maintaining adequate coverage throughout your life.

Key person insurance protects a business against the financial loss caused by the death of a critical employee or owner. The business owns the policy and receives the benefit, which can cover recruitment costs, lost revenue, and loan repayment.

A healthy non-smoking 35-year-old can get $500K in 20-year term coverage for ~$25-$40/mo at Preferred rates. $1M coverage runs ~$35-$65/mo. Rates double approximately every 10 years of age, and smokers pay 2-3x more.

Generally no, unless you have significant debts with cosigners, plan to have dependents soon, or want to lock in low rates while young and healthy.

Usually no. Employer policies typically provide 1-2x salary, which is insufficient for most families. They are also not portable — if you leave the job, you lose the coverage. Always supplement with a personal policy.

The Coverage Score (0-100) is our composite metric that measures how well-covered you are. It considers how much of your DIME need is already funded, your income replacement duration, and your savings buffer. 70+ is well-covered; below 40 is critically undercovered.

Yes, for longer replacement periods. Inflation-adjusting at 3% p.a. using a PV annuity formula gives a more accurate coverage target. For 10-year windows the difference is modest; for 20-30 year windows it can add 15-30% to the coverage need.

The insured is the person whose life is covered. The beneficiary receives the death benefit if the insured dies. These are typically different people — for example, you are the insured and your spouse is the beneficiary.

Most policies have a 2-year suicide exclusion — meaning claims for suicide within 2 years of policy issue may be denied. After the exclusion period, most policies do cover suicide.