Life Insurance Needs Calculator

A common starting point is 10-12 times your annual income, but a needs-based analysis is more accurate. Add up income replacement (annual income multiplied by years your family would need support), outstanding debts (mortgage, loans), future obligations (children's education), and final expenses. Then subtract existing savings, investments, and any current coverage.

Term life insurance covers you for a specific period (10, 20, or 30 years) at a fixed premium and is significantly cheaper. Whole life insurance covers your entire lifetime and includes a cash value component that grows over time but costs 5-15 times more than term. Most financial advisors recommend term insurance and investing the premium difference for better overall returns.

Buy life insurance when others depend on your income: getting married, having children, buying a home, or taking on shared debt. The younger and healthier you are, the cheaper premiums will be. A healthy 30-year-old can get a $500,000 20-year term policy for $25-$35 per month. Waiting until 40 can double or triple that cost.

If no one depends on your income, you likely do not need life insurance. However, exceptions include having co-signed loans (the co-signer becomes responsible), wanting to leave an inheritance, covering final expenses and funeral costs, or locking in low rates while young and healthy before future needs arise.