Life Insurance Calculator for Family Financial Planning

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2011/04/24 - Updated: 2025/06/23
Publication Type: Charts, Graphs, Tables
Category Topic: Medical Calculators and Charts - Academic Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This information resource presents a practical online calculator designed to help individuals determine appropriate life insurance coverage based on their family's specific financial needs and circumstances. The resource provides authoritative guidance by focusing on the concept that life insurance should provide sufficient investment capital for survivors rather than simply replacing income, with the calculator considering factors such as family resources, existing debt, current expenses, and future income requirements. The information is particularly valuable for people with disabilities and seniors who may face unique financial challenges or have dependents requiring ongoing care, as it emphasizes the importance of maintaining survivors' standard of living through strategic financial planning. The calculator's methodology assumes survivors will invest insurance proceeds and gradually draw down the account, making it a practical tool for comprehensive financial planning that addresses real-world scenarios where traditional income replacement formulas may fall short - Disabled World (DW).

Introduction

What is Life Insurance?

If you have a family that's dependent on your income, then you need life insurance. Life insurance is defined as a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money a "premium" upon the death of the insured person. The calculator below will assist you in calculating approximately how much life insurance you should have.

Main Content

How Much Life Insurance Do You Need?

How Much Life Insurance Should You Apply For? The answer isn't really how much life insurance you need... it's how much investment capital your family will need at the time of your death. By providing some basic information on your family's resources, debt and expenses, current life insurance coverage and future income needs, the calculator will give you an estimate of the amount of needed life insurance coverage. This calculator assumes your survivors will invest your insurance proceeds and then draw down the account gradually.

Annual income needs equals the total amount your family needs, before taxes, to maintain their current standard of living, typically 60%-75% of total income. Families with higher incomes typically fall into the lower end of that range. Need a means to support yourself and your family if you become critically ill or die?

Critical Illness Insurance cover pays out a cash sum if you're diagnosed with one of the defined critical illnesses or upon your death. For further information see our article on Choosing Between Disability Insurance and Critical Illness Insurance, Remember:

The amount of life cover you need should be reviewed regularly and as your financial circumstances change.
If you are unsure of the amount of cover you require you should speak to an Independent Financial Adviser.

The Calculator

Calculate how much life insurance you need if your survivors invest the life insurance benefits they receive.

Life Insurance Calculator
Funeral cost, estate taxes, etc. All costs required to cover the cost of the funeral:
Amount needed to pay off non-mortgage debt:
Amount needed in emergency fund:
Amount needed in college fund. Amounts you wish to provide your surviving children to cover future college expenses:
Expected average annual living expenses:
Expected spouse's average annual income after taxes:
Annual Social Security Benefits and Social security survivor benefits. Depending on your work history, your family may qualify for Social Security benefits. Typically, Social Security benefits for the widow/widower cease when the youngest child turns 16. The child's benefit generally continues to age 18. Once the children are gone, Social Security benefits are generally not available until the widow/widower turns age 60:
Spouse's current age:
Value of current liquid assets ($ total of savings, investments, etc.) Cash and savings: Total you have in cash, checking accounts, savings accounts or other accounts that can be used to help cover expenses. Home equity: Total amount of equity in your home that you are willing to use toward your living expenses. Only include the home equity that you consider available to use toward your living expenses. For example, the equity you would make available by selling your home and moving into a smaller one. Investments: Total value of all investments that you are willing to use toward your living expenses. Other: Any other assets that you may be willing to sell or liquidate.
Expected survivor's investment strategy:

Your Life Insurance Needs =

Insights, Analysis, and Developments

Editorial Note: While online calculators provide valuable starting points for life insurance planning, they cannot replace personalized consultation with qualified financial advisors who can account for complex individual circumstances, tax implications, and changing regulations. The calculator's emphasis on investment capital rather than simple income replacement represents a more sophisticated approach to life insurance planning, but users should remember that insurance needs evolve with life changes and should be reviewed regularly to ensure adequate protection for beneficiaries - Disabled World (DW).

Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.