Additional life insurance needed using income-replacement math

The Income Replacement Method

The most common approach to life insurance sizing: replace the income the household loses, pay off existing debts and mortgage, and fund future child-related costs. This calculator combines all four into a single target face value.

How Many Years to Replace?

For a young family with small children, 15-20 years replaces income through the children's independence. For a pre-retirement household, 5-10 years bridges to when retirement savings would kick. The common defaults are 10x income for single earners and 15x for primary earners in a family.

Quick example

With annual income of 80,000 and years of income to replace of 10 (plus outstanding non-mortgage debt of 20,000 and mortgage balance of 250,000), the result is 1,120,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Annual Income, Years of Income to Replace, Outstanding Non-Mortgage Debt, Mortgage Balance, and Children Future Cost. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Sums income replacement, outstanding debt, mortgage balance, and projected children's future cost, then subtracts existing coverage. Does not account for inflation on income replacement (a conservative omission) or investment growth on the payout. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

What to do with a low result

A disappointing result is information, not a judgement. Pick the single input that dragged the figure down most and focus the next quarter on that one factor. Breadth-first improvement rarely works; depth-first on the worst input usually does.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.