Risk Life Insurance Calculator – Find Your Coverage Needs
Calculate recommended life insurance coverage amount
How to Use
- Enter your annual income and desired years of coverage
- Add outstanding debts like mortgage and loans
- Include children's education fund needs
- Enter funeral and final expense estimates
- Subtract existing life insurance and savings
- Review your recommended coverage amount
What is Term Life Insurance?
Term life insurance (also called risk life insurance) provides death benefit protection for a specific period, typically 10, 20, or 30 years. If the insured person dies during the term, beneficiaries receive the death benefit. It's the most affordable type of life insurance.
Unlike whole life insurance, term policies don't accumulate cash value. This makes them significantly cheaper, allowing you to purchase more coverage for your budget. Most financial experts recommend term life for income replacement needs.
How Much Coverage Do You Need?
A common rule of thumb is 10-12 times your annual income, but the actual amount depends on your specific situation. Consider income replacement for your dependents, outstanding debts, future education costs, and final expenses.
- Income replacement: Typically 5-10 years of annual income
- Mortgage and debts: Full payoff amounts
- Education: Future college costs for children
- Final expenses: Funeral, medical bills, estate settlement
- Subtract: Existing savings and insurance policies
The DIME Method
DIME stands for Debt, Income, Mortgage, and Education. Add up your total debts, multiply your income by years until retirement, add your mortgage balance, and estimate education costs. This gives a comprehensive coverage estimate.
When Should You Buy Life Insurance?
- Getting married or having children
- Buying a home with a mortgage
- Starting a business or taking on debt
- When others depend on your income
- While you're young and healthy (lower premiums)
Frequently Asked Questions
- How is life insurance coverage calculated?
- Coverage is calculated by adding your income replacement needs (annual income × years), outstanding debts, education funds, and final expenses, then subtracting existing life insurance and savings. This gives your coverage gap.
- What's the difference between term and whole life insurance?
- Term life covers a specific period (10-30 years) and has no cash value—you're paying purely for death benefit protection. Whole life is permanent, builds cash value, but costs 5-15 times more for the same death benefit.
- How many years of income should life insurance replace?
- Financial experts typically recommend 5-10 years of income replacement. Consider how long until your children are independent, your spouse could return to work, and debts would be paid off.
- Do I need life insurance if I'm single with no dependents?
- You may not need much if no one depends on your income. However, consider coverage to pay off debts, cover final expenses, or lock in low rates while you're young and healthy.