How to read the result
Insurance needs have no single correct number, only estimates from different angles, so this page returns a range. Three methods apply: the income multiple, the cost of raising dependents, and paying off the mortgage. The highest figure sets the low end, because a shortfall in any one of them is a real shortfall.
Reference figures
Typical ranges, not targets — check your own situation.
| Method | How it is calculated | Typical range |
|---|---|---|
| Income multiple | Annual income × 5–10 | Most households |
| Dependent cost | Monthly cost × 12 × 14–20 years | Depends on ages |
| Mortgage coverage | Remaining principal and interest | Any active mortgage |
| Emergency fund | 3–6 months of essential expenses | First layer, not insurance |
| Total premium | Roughly 10% of annual income | A planning guideline |
| Waiting period | 30–90 days before benefits start | Plan around it |
Assumptions and limits
- All amounts are estimate ranges, not quotes or underwriting limits.
- Dependent costs are extrapolated linearly and ignore age differences.
- The mortgage method assumes a level-payment schedule.
- Inflation, Social Security, and future income growth are ignored.
- Group cover and cash value are not coverage amounts.
- No product or insurer is recommended. Policy terms and underwriting rules govern.
FAQ
Where does the income multiple come from?
It is the DIME method: debts, income, dependents, final expenses. Three kids and a mortgage can need 15–20× income.
Do I need mortgage insurance?
Not always. Term life sized to the balance, or earmarked savings, can do the same job.
Can savings replace insurance?
Partly. Savings take time to draw down, and a policy pays a fixed amount. Keep 3–6 months of expenses in cash.
Cover the adults or the children?
The adults. They carry the income, the dependents and the debt, so household cash flow breaks with them.
How is the replacement ratio set?
From the costs that survive a lost earner: mortgage, tuition, debt payments. 60% is a common reference value.
Why is the range so wide?
Each method has its own range, and stacking them widens it further. The tool gives a magnitude, not false precision.
Which gap should I close first?
Usually the top two rows: emergency fund, then term life sized to debts and dependents.
How is this different from an agent's quote?
A quote names products and premiums. This page stops at how much coverage you need, and says nothing about underwriting.
Methodology
Income multiple: annual income × 5 and × 10. Dependent cost: monthly cost per dependent × 12 × 14 and × 20 years. Mortgage: the level payment on the remaining balance over the remaining term, plus 10% of income on the high end. The range takes the highest low and the highest high; the gap subtracts existing life coverage and liquid savings.