Life Insurance Future Planning Tool Calculator

Set ages, income, and family goals in minutes. See gaps, priorities, and practical coverage ranges. Download results for sharing with advisors and family easily.

Calculator Inputs

All currency values use your chosen base currency.
Layout: 3 columns large, 2 medium, 1 small.
Used to cap the income support horizon.
Supports replacing income up to retirement.
Capped by years until retirement.
Before tax, or your planning income basis.
Common planning ranges are 60%–80%.
Used to grow future income needs.
Discount rate for present-value planning.
Employer plans and personal policies included.
Savings and investments available for goals.
Mortgages, loans, and other obligations.
Children or others relying on your income.
Optional, can be set to zero.
Amount you want left after core needs.
Funeral, medical, and settlement costs.
Adds short-term stability for your household.
What counts as a “good” assumption?
Use conservative values when unsure. Many planners use 2%–4% for inflation and 4%–6% for long-run diversified returns. Your risk, taxes, and fees matter.

Example Data Table

Profile Age Income Replace % Years Existing Suggested
Early-career family 30 $55,000 75% 25 $25,000 $540,000
Mid-career homeowner 42 $95,000 70% 20 $150,000 $780,000
Debt-light planner 50 $80,000 60% 15 $250,000 $360,000
Examples are illustrative and depend heavily on assumptions and goals.

Formula Used

This tool estimates required coverage using a needs-based approach: income support (present value) plus one-time goals, then reduced by offsets.

Present value of inflation-growing income
PV = P1 × (1 − ((1+g)/(1+r))n) ÷ (r − g)
P1 = income × replacement rate, g = inflation, r = return, n = years of support.
Coverage gap and recommendation
Total Needs = PV(income) + debts + education + final + legacy + buffer
Gap = max(0, Total Needs − (existing coverage + liquid assets)). Suggested coverage rounds the gap up to the nearest 1,000.

Income Replacement Benchmarking

A practical starting point is replacing 60% to 80% of gross income for working years. For a $60,000 income and 70% target, year-one support is $42,000, or $3,500 monthly. This tool converts that target into a present-value funding need, so coverage reflects time value and not a simple income multiple.

Inflation and Horizon Sensitivity

Inflation grows the support stream, while the return assumption discounts it. With 3% inflation and 5% return over 25 years, the present value of a $42,000 first-year need is lower than the nominal sum of payments. If inflation rises to 4% with the same return, required coverage typically increases because future cash flows grow faster.

Debt and Education Load Mapping

One-time obligations are added at face value to the plan. A mortgage balance of $80,000 plus final expenses of $10,000 immediately lifts the funding target by $90,000. If there are two dependents and a $20,000 education goal each, education adds $40,000 to the requirement, helping you quantify goals that are often underestimated. Adding a six-month buffer equals 6 × $3,500 = $21,000, supporting bills during transition. A separate $25,000 legacy goal can fund charitable gifts or milestones without reducing the income support plan for survivors and dependent care.

Asset Offsets and Coverage Layering

Offsets reduce the gap: existing policies and liquid assets are subtracted from total needs. For example, $50,000 existing coverage and $25,000 assets reduce the required new coverage by $75,000. This encourages layering, where employer coverage, term insurance, and savings each play a defined role.

Scenario Discipline and Review Cadence

The calculator runs conservative and optimistic return cases by shifting the return assumption by 2 percentage points. If the base return is 5%, scenarios evaluate 3% and 7% to stress the coverage gap. Recheck assumptions after major events—marriage, a new loan, a child, or a pay change—so coverage remains aligned with the household balance sheet.

FAQs

What does “years of income support” represent?
It is the number of years you want the policy proceeds to help replace income. The tool caps it by years until retirement, so the support horizon stays realistic.
Should I enter gross income or take-home pay?
Use the income basis your household budgets from. Many planners start with gross income and adjust the replacement rate to reflect taxes, benefits, and spouse earnings.
Why do inflation and return assumptions matter so much?
Inflation increases future cash needs, while the return assumption discounts them to today’s value. A higher inflation rate or lower return rate usually increases the present value of income support.
Why are existing coverage and liquid assets subtracted?
They are immediate resources available to meet the same goals. Subtracting them prevents double counting and helps you decide how much additional insurance is needed beyond what you already have.
Does this tool replace professional advice or underwriting?
No. It estimates a planning target based on inputs and assumptions. Product choice, health class, taxes, and policy features can change outcomes, so review results with a licensed advisor.
How often should I update the calculation?
Recalculate after major life or financial changes, and at least once a year. Updating keeps assumptions, debts, and goals aligned with your current household plan.

How to Use This Calculator

  1. Enter your age, retirement age, and years of support.
  2. Add income and choose a replacement percentage.
  3. Set inflation and return assumptions for planning.
  4. Include debts, education goals, and final expenses.
  5. Add existing coverage and liquid assets as offsets.
  6. Click calculate to see the gap and suggested coverage.
If your household has irregular income, business ownership, or special needs planning, treat the output as a starting point and refine assumptions.

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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.