Why "10x your salary" gets it wrong in both directions
Salary multiples ignore everything that actually determines the need: a 55-year-old with grown kids, a paid-off house and $800,000 saved may need zero life insurance at 10× salary; a 32-year-old with three toddlers, a new mortgage and thin savings may need 15-20×. The number that matters is the gap between what your dependents would need and what already exists to meet it. That's what this calculator computes — a version of the DIME method (Debt, Income, Mortgage, Education) with two upgrades: income replacement is priced as an invested annuity rather than a raw multiplication, and existing resources are subtracted instead of ignored.
The five inputs that matter
- Income replacement is usually the biggest block. The lump sum needed is less than salary × years because the payout gets invested and drawn down — $60,000 a year for 15 years needs about $743,000 at a 2.5% real return, not $900,000. Use after-tax income (death benefits are income-tax-free), and count the years until your youngest would be independent.
- Mortgage payoff is a choice: clearing it outright means the survivor's biggest fixed cost disappears, buying enormous breathing room. Alternatively, keep a cheap mortgage and size income replacement to cover the payment — a lower total either way, but most families sleep better with the payoff.
- Other debts — car loans, cards, private student loans (federal loans die with you; private ones with a cosigner don't).
- College at roughly $80,000-100,000 per child for in-state public today (see the college savings calculator for your own number).
- Offsets: liquid savings your family would genuinely use, plus existing coverage. Be honest about both — retirement accounts your spouse shouldn't be forced to raid at 40 don't belong here, and group life through work typically vanishes when the job does.
Term vs whole life, in one paragraph
For covering a need that ends — kids grow up, mortgages amortize, savings compound — level term insurance is the right tool: a fixed premium for 10-30 years, pure protection, no investment component, priced at a fraction of permanent coverage. A healthy 35-year-old buys $500,000 of 20-year term for roughly $20-30 a month; the same death benefit in whole life runs $400-500. The consensus advice is buy term and invest the difference — the full argument, including the narrow cases where permanent insurance earns its cost, is in our life insurance guide. What the premium difference compounds into over 25 years is exactly the kind of question the compound interest calculator answers.
Matching the term length
Pick the term to outlive the need, with margin. Youngest child is 3 and independent at 22 → a 20-year term covers it. Mortgage has 25 years left and the payoff matters to you → 25 or 30 years. The failure mode to avoid is a 10-year term that expires at 45 with kids still at home — re-qualifying then, a decade older and with whatever health history has accumulated, costs multiples of the original premium. If needs taper rather than end abruptly, laddering works well: e.g. $500,000 of 10-year + $500,000 of 20-year term costs meaningfully less than $1M of 20-year, and matches coverage to a shrinking gap.
Who needs coverage on them — and who doesn't
- A non-earning or lower-earning spouse still needs coverage if their death would force paid childcare, or the survivor to cut hours. Full-time childcare for two kids runs $2,000-3,500/month in much of the country — that's a $300,000-500,000 need nobody prices until it happens.
- Single people with no dependents generally need only final-expense-level coverage, if that. Same for retirees whose kids are launched and whose spouse is provided for by assets — insurance is for dependents, not for leaving a score.
- Children don't need life insurance; nobody depends on their income. The marketing suggesting otherwise is selling something else.
- Business owners and cosigned debts are the special cases — buy-sell agreements and cosigner protection legitimately call for policies outside this calculator's family math.
Keeping the premium honest
Life insurance is one of the most shopped-out financial products: identical coverage varies 30-50% between insurers because each prices health classes differently. Get quotes from several carriers (independent brokers and comparison sites do this in one pass), don't smoke, and apply sooner rather than later — every birthday nudges the premium up 5-8%, and premiums lock for the whole term. Once the policy is in force, fold it into the budget with the budget calculator and revisit the coverage number at every major life event: new child, new house, big raise, or a spouse leaving work.