Plan protection needs with clear, guided inputs quickly. Balance family goals, loans, and savings smartly. Get a coverage target and close the gap confidently.
Income to Replace
Present Value of Income Replacement
Life Coverage Recommendation
Other Suggestions use common rules-of-thumb: disability benefit targets a percent of monthly income (with an optional cap), and umbrella liability is set to at least 1,000,000.
| Scenario | Annual Income | Replacement Years | Debts | Assets (usable) | Current Coverage | Recommended Coverage | Coverage Gap |
|---|---|---|---|---|---|---|---|
| Sample Household | $80,000.00 | 20 | $160,000.00 | $72,000.00 | $280,000.00 | $837,758.16 | $557,758.16 |
Start with income that must continue for dependents. The tool multiplies (income minus other income) by your replacement percent. It then discounts each future year over your chosen horizon. With 80,000 income, 20,000 other income, 70%, 20 years, 2.5% inflation, and 5.5% discount, the growing present value is about 613,758. If you select level payments, inflation is ignored, lowering PV when inflation is high.
Next, add liabilities that survivors would need to clear. Mortgage balance and other debts are included at face value, because they are immediate obligations. The calculator also adds final expenses for medical, legal, and funeral costs. In the sample table, 150,000 mortgage plus 10,000 other debts and 15,000 final expenses add 175,000 to required coverage. If debts are shared, allocate only your responsible portion.
Family goals can be large and time‑bounded. Education need equals children times your per‑child target, then gets added to the coverage pool. Emergency funding equals essential monthly spending times your chosen months, giving survivors a cash runway. With two children at 50,000 each, education adds 100,000. With 3,500 essentials and six months, emergency adds 21,000 before assets are applied. Adjust targets for local tuition.
Not every dollar of savings offsets needs equally. Liquid assets count fully, while retirement assets are reduced by a usable percentage to reflect taxes and access timing. The tool sums usable assets and subtracts them from total need to produce recommended life coverage. It then compares that target to existing plus employer coverage to compute the gap. Premium estimates multiply gap/1,000 by your rate.
Income loss can also come from disability, not only death. The calculator suggests a monthly disability benefit as a percent of monthly income, optionally capped, then shows your shortfall. For 80,000 income, monthly income is 6,667; 60% suggests about 4,000, versus 1,500 current, a 2,500 gap. Umbrella liability is at least 1,000,000 and rounded to net worth. Review policy limits after major life events.
1) What does present value mean in this tool?
It converts future income needs into today’s lump sum using your discount rate. Higher discount rates lower the present value, while longer horizons increase it. Use conservative assumptions if you are unsure.
2) Should I include spouse income as other income?
Include income that would likely continue if you were gone, such as a spouse’s earnings or pensions. Exclude income that depends on you working. When in doubt, model two scenarios: optimistic and cautious.
3) Why does the calculator apply a retirement usable percentage?
Retirement accounts can be taxed, penalized, or hard to access quickly. The usable percentage approximates what survivors could realistically draw in an emergency. If your beneficiaries can access accounts efficiently, raise the usable percentage.
4) What if my current coverage is higher than the recommendation?
A surplus can be reasonable if you expect higher future costs, business obligations, or special‑needs dependents. Review whether premiums fit your budget and whether beneficiaries and ownership are correct. You can also reduce coverage or redirect savings.
5) How do I choose a disability percent and monthly cap?
Many households target 50–70% of gross monthly income, but employer plans often cap benefits. Enter your desired percent, then set the cap to the maximum benefit available to you. Compare the recommendation to your current benefit to see the gap.
6) Is the umbrella liability suggestion a final recommendation?
No. It is a simple starting point based on net worth and a minimum floor. Your real need depends on liability risks, driving habits, properties, and local legal environments. Ask an agent to quote incremental limits and compare costs.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.