Calculator inputs
Example data table
These examples are illustrative and may not match your situation.
| Scenario | Income | Replace % | Years | Debts + Mortgage | Savings + Existing | Suggested Cover (approx.) |
|---|---|---|---|---|---|---|
| Young family | $70,000 | 70% | 20 | $98,000 | $70,000 | $550,000 |
| Single parent | $55,000 | 80% | 18 | $45,000 | $30,000 | $620,000 |
| Mortgage-heavy | $95,000 | 65% | 15 | $240,000 | $120,000 | $850,000 |
Formula used
- Annual need = max(0, (Income × Replace%) + Childcare − Other support income)
- Real rate = (1 + Return) / (1 + Inflation) − 1
- Income support present value = PV(ordinary annuity) = Pmt × (1 − (1 + RealRate)−Years) / RealRate
- Total needs = Income PV + Debts + Mortgage + Final expenses + Education + Retirement gap
- Recommended coverage = max(0, Total needs − (Savings + Emergency fund + Existing coverage))
If RealRate is near zero, the annuity PV is approximated as Pmt × Years.
How to use this calculator
- Enter your income, how much you want replaced, and years of support.
- Add one-time goals like paying off debts, mortgage, and education.
- Include realistic inflation and return assumptions for a stress test.
- Subtract savings, emergency funds, and existing coverage you already have.
- Use the recommended coverage as a shopping starting point.
For a final decision, compare multiple insurers and confirm underwriting details.
Professional notes
Coverage target logic
This calculator estimates a family protection target by combining ongoing income support with one-time obligations. Income support is discounted to today using a real rate derived from your return and inflation assumptions, then added to debts, mortgage payoff, final expenses, education funding, and any retirement gap you include.
Income replacement benchmarks
Many planners test replacement levels between 60% and 80% of gross income because taxes, commuting, and payroll deductions may change after a loss. For example, a $70,000 income at 70% replacement starts at $49,000 per year before offsets such as spouse earnings or steady rental income.
Debt and goal funding
Lump sums can shift the result materially, especially for households carrying large fixed balances. A $90,000 mortgage, $8,000 debts, $12,000 final expenses, and a $20,000 education goal add $130,000 to needs immediately. Enter realistic numbers so coverage protects both cash flow and milestones.
Inflation and return assumptions
Inflation adjusts the spending stream upward, while return discounts future amounts back to the present. With 6% return and 3% inflation, the real rate is about 2.9%. Lower real rates increase the present value of support, meaning higher coverage is required to deliver the same future spending power.
Interpreting premium estimates
The premium estimate is a comparison aid, not a quote. It scales a monthly cost per $1,000 of coverage by age band, term length, health class, and gender. Use it to compare term options, then confirm with insurer underwriting, riders, and location-based pricing. for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning only for planning
FAQs
1) Why does the calculator discount income support?
Income support is modeled as future payments. Discounting converts those payments into today’s value using the real rate, helping you compare a long stream of support to a single coverage amount.
2) What if my inflation assumption is higher than return?
That produces a very low or negative real rate, increasing the present value of support. In practice, you may want to use conservative return assumptions or shorten the support horizon.
3) Should I include an emergency fund as available?
If your emergency fund is intended to support the family after a loss, include it. If it is reserved strictly for short-term disruptions, you can reduce or exclude it for a more conservative target.
4) How do I choose years of support?
Common choices include the years until children are financially independent, until a spouse reaches retirement age, or until a mortgage is paid down. Shorter horizons reduce the income support present value.
5) Why is recommended coverage rounded?
Policies are often priced and compared in round coverage increments. Rounding to the nearest $1,000 improves shopping clarity without meaningfully changing the planning direction.
6) Is the monthly premium estimate accurate?
It is a simplified comparison estimate. Actual premiums depend on underwriting, medical history, lifestyle, riders, and insurer pricing. Use the estimate to guide ranges, then obtain formal quotes.