Model your payout with clear tax assumptions fast. Include loans, riders, and inflation effects easily. See net benefits and plan smarter for heirs today.
Enter your policy details, tax assumptions, and optional estate settings. Results appear above this form after submission.
Sample scenarios to show how inputs can change estimated net proceeds.
| Scenario | Face Amount | Loan | Taxable % | Income Tax | Estate Tax? | Estimated Net |
|---|---|---|---|---|---|---|
| Clean policy | $500,000 | $0 | 0% | 22% | No | $500,000 |
| Loan + small taxable | $750,000 | $25,000 | 5% | 24% | No | ≈ $716,000 |
| Estate exposure | $2,000,000 | $0 | 0% | 0% | Yes | Depends on exemption and rate |
1) Gross Benefit = Face Amount + Rider Additions
2) Taxable Amount = (Gross Benefit × Taxable %) + Additional Taxable Amount
3) Income Taxes = Taxable Amount × Income Tax Rate
4) Estate Taxes (optional) = max(0, Gross Benefit − Estate Exemption) × Estate Tax Rate
5) Net Benefit = Gross Benefit − Loan Payoff − Income Taxes − Estate Taxes
6) Inflation-Adjusted Net = Net Benefit ÷ (1 + Inflation Rate)Years
Life insurance proceeds are often received income‑tax free, yet real‑world deductions can reduce what beneficiaries finally receive. This calculator estimates gross proceeds from face amount and riders, subtracts policy loans, then applies user‑defined taxable portions and tax rates. It also adds an optional estate‑tax estimate and an inflation adjustment so you can compare “future dollars” with today’s purchasing power. Use it for quick planning conversations and scenario checks.
The largest driver is the policy’s gross benefit, but small assumptions can shift the net materially. A 5% taxable portion on a $750,000 benefit creates $37,500 of taxable income before any fixed taxable items. When combined with a 24% income‑tax rate, that single assumption reduces the payout by $9,000. Loans matter even more because they reduce proceeds dollar‑for‑dollar and may trigger lapse concerns.
Taxability varies by jurisdiction, ownership structure, and how the benefit is paid. Use the taxable percentage to represent the portion you believe could be taxable, and use the fixed taxable amount for items such as reportable interest or gains. The calculator then estimates income taxes only on that taxable base, keeping the remaining proceeds treated as tax‑free in the scenario. Document why you chose each assumption.
Some estates may face transfer taxes depending on local rules and exemptions. The optional estate section applies your exemption and rate to proceeds above the exemption, producing a simplified estimate for comparison. If you expect a claim years ahead, the inflation adjustment discounts the net benefit by (1+inflation)^years, helping you decide whether coverage still meets future needs. Try multiple inflation rates for sensitivity.
Use the results panel to compare gross benefit, deductions, and net benefit side‑by‑side, then download a summary for discussions with your adviser. Stress‑test scenarios by raising the taxable percentage, increasing loans, or lowering exemptions. If the inflation‑adjusted net falls below your target, consider increasing coverage, paying down loans, or restructuring ownership to improve after‑tax outcomes. Revisit annually after major life events and beneficiary designation updates.
Often they are income-tax free, but exceptions exist. Interest paid on delayed proceeds, certain employer-owned arrangements, or policy lapses with loans can create taxable outcomes. Local rules matter.
Use 0% if you expect fully tax-free proceeds. If you anticipate a taxable component, enter a conservative percentage based on your situation and documentation, then test higher values to see the range.
Loans are typically repaid from the death benefit, reducing the amount beneficiaries receive. Large loans can also increase lapse risk, which may trigger taxes depending on how the policy is structured.
It is a simplified scenario model using your exemption and rate inputs. Actual estate inclusion depends on ownership, beneficiaries, trusts, jurisdiction, and timing. Use it to compare scenarios, not for filing.
Inflation reduces purchasing power over time. Discounting the net benefit helps you understand what future proceeds may be worth in today’s dollars, supporting coverage decisions and long-term planning.
Yes. Change one input at a time—taxable portion, loan balance, exemption, or inflation rate—then compare the results and chart. Download summaries to keep a record of your assumptions.
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.