Everyone should make use of a life insurance calculator, but most people have never heard the term. What is a life insurance calculator? It is a handy tool that will calculate how much additional money your family would need if you died today. It might be the most important tool you will ever use.

Every major provider of life insurance has their own version of a life insurance calculator. Some major news and financial sites such as Forbes also offer them. They are all available online and are free and simple to use. Simply search for the phrase ‘life insurance calculator’ and a dozen different versions will come up.


While each calculator is different, they all follow the same basic format. First, they need to know about your final expenses. How expensive do you think your funeral would be? The average funeral now costs upwards of $10,000. Second, the program will need your yearly income. It will also need to know how long you want to provide this income for your family. The answer will vary depending on your personal situation. Do you have young children? Are your children grown and out of the house? Do you want or expect your spouse to keep working after you are gone, and for how many years? These are personal questions you will have to answer.

Next, the calculator will ask some questions about your debts. It will want to know what your existing mortgage and debt obligations are. If you don’t want your insurance proceeds to pay off the mortgage and other debts, enter ‘0’, otherwise enter the current amount. The calculator might also ask you how many children you need to provide college funding for, and how old they currently are. It will also ask you what your current savings and life insurance benefits are worth.

When all is said and done the life insurance calculator will tell you how much life insurance you need to have to protect your family. For example, if you have no outstanding debts, make $50,000 a year, and wish to support your family until your child is eighteen, you will need to have $665,000 of life insurance. This assumes your spouse doesn’t work and it doesn’t include money for college.

If that is a scary number, take heart. Remember that life insurance is cheap, and the cost is worth it to protect your family.