Worksheet
Life insurance needs worksheet
This worksheet adds up what you type into a single figure to start a conversation with a licensed agent or planner. It supplies no premium, rate or price, and it does not know your family. Amounts are in whatever currency you use. The result updates as you type, and nothing leaves your device.
Worked example (shown when scripts are off): income of 50,000 for 10 years is 500,000. Add debts of 200,000 and future costs of 100,000 for 800,000 in total. Subtract 150,000 of existing coverage and 50,000 of savings. The rough starting figure is 600,000. It is a rough starting figure, not a recommendation.
Before you decide
The result is a rough starting figure, not a recommendation. It is general information, not insurance or financial advice. Two people with the same sum can reasonably choose different amounts and policy types, so talk to a licensed agent or adviser about your situation.
The formula, in words
- Income to replace = yearly income to replace times the number of years.
- Total needs = income to replace plus debts plus future costs.
- Resources = existing coverage plus savings.
- Rough starting figure = total needs minus resources, never below zero. If your resources are higher than your needs, the figure is zero and the page shows the difference.
Filling in each line
Yearly income to replace is the part of your income that others rely on, which you decide. Years is how long they would need it, for example until a child is independent or until a partner could be self-supporting. Debts are what would still be owed. Future costs are anything you can name, such as education or final expenses. Existing coverage covers any policy you already hold, including coverage through an employer, which may end if you leave the job. Savings should only include money you would really be willing to use.
What this worksheet leaves out
It is a plain sum. It does not adjust for inflation, investment returns, taxes, benefits others might receive, a partner's income, childcare, health costs or a change in your circumstances. It does not say which type of policy suits you, or whether a term or permanent policy fits, which is a separate question covered in our comparison of term and whole life. Many rules of thumb exist for sizing coverage, and they give very different answers, which is a good reason to treat any single figure as a starting point only.
The deeper reasoning behind each line is in how to decide how much term life insurance you need.
Where this comes from
The method of adding income replacement, debts and future costs and then subtracting existing coverage and savings follows the factors named in the National Association of Insurance Commissioners (NAIC) Life Insurance Buyer's Guide and its consumer tips: who depends on your income, debts, long-term obligations such as education or housing, existing coverage (which may not be portable if it comes from an employer), and savings that could cover expenses. We did not take any number from a source: you type all of them. The arithmetic is our own and was tested in Node against hand-worked cases, including blank, negative and very large entries. For questions about a specific policy or insurer, contact your state insurance department.
Go deeper
- How much term life insurance you actually need
- Term life vs whole life insurance
- Policy review and claim documentation checklist
General information, not insurance or financial advice. Your state insurance department and the NAIC offer consumer help.