How much life insurance do I need?

Add the income your family would need for the years they depend on you, your mortgage, debts and future costs, then subtract savings and existing cover. This calculator does that sum for you.

What is the DIME method?

A needs-based estimate that adds Debt, Income replacement, Mortgage and Education costs. This calculator also subtracts what you already have.

Is ten times my salary enough?

It is a starting point. It ignores your debts, savings and how long your family needs support, so the needs-based figure is usually more accurate.

Should I choose term or whole life insurance?

Most families protecting an income choose term, which costs much less for the same cover. Permanent insurance mainly suits lifelong needs or estate planning.

Is life insurance through work enough?

Usually not. It is often only one or two times salary and normally ends when you leave the job.

Life Insurance Calculator - How Much Do You Need

Estimate how much life insurance you need

Enter the income your family would need to replace and for how many years, your mortgage, other debts, future costs such as university, and the savings and coverage you already have. The calculator adds up the needs, subtracts what is already in place, and shows the gap a policy would need to fill.

How the estimate is built

The method follows the needs-based approach advisers often call DIME, for debt, income, mortgage and education:

Income replacement: your annual income multiplied by the years your family would rely on it.
Mortgage: the balance, so your family could stay in the home.
Other debts: car loans, student loans and credit cards.
Future expenses: university, a child's care, or anything else you have committed to.
Minus savings and existing life cover, including workplace policies.

With the starting figures, 60,000 dollars of income for ten years, a 200,000 dollar mortgage, 15,000 of other debts and 100,000 of future costs, less 50,000 already saved, the estimate is 865,000 dollars.

Choosing the number of years

Count the years until your youngest child would be self-supporting, or until your partner could reach retirement without your income. A parent of a newborn might choose 20 years; someone whose children are in their late teens might choose five.

Compared with the quick rules

A commonly quoted rule of thumb is ten times your salary. It is a reasonable starting point but ignores your debts, your savings and how long your family actually depends on you. Two people with the same salary can need very different amounts.

Term or permanent?

Term life insurance covers a fixed period, such as 20 or 30 years, and costs far less for the same amount of cover, which is why it suits most families protecting an income. Permanent policies such as whole life last for life and build cash value, but premiums are many times higher. They mainly make sense for lifelong needs, such as a dependant who will always need support or estate planning.

Easy things to overlook

Workplace cover is often only one or two times salary and usually ends when you leave the job.
A stay-at-home parent needs cover too. Childcare and running a household cost real money to replace.
Inflation. Income replacement here is not adjusted for rising prices, so add a margin if you choose a long period.

Estimates only, not financial advice. A licensed adviser can tailor coverage to your situation and health.