Question 1

How do I calculate how much life insurance I need?

Accepted Answer

Add up the income your family would need to replace, outstanding debts (mortgage, auto loans, student loans), future education costs for children, and final expenses. Then subtract existing resources like current life insurance, savings, and Social Security survivor benefits. The difference is your coverage gap.

Question 2

What is the difference between term and whole life insurance?

Accepted Answer

Term life insurance covers you for a set period (10, 20, or 30 years) and pays a death benefit only if you die during that term. It is significantly cheaper. Whole life insurance covers you for your entire life and includes a cash value component that grows over time, but premiums are much higher. Most financial planners recommend term life for the majority of people.

Question 3

What is the income replacement method for life insurance?

Accepted Answer

The income replacement method estimates how much life insurance you need by multiplying your annual income (minus your spouse's income) by the number of years your family would need financial support. This covers the lost earning power and is one of the most common approaches to sizing a life insurance policy.

Insurance Needs

Your Situation

Total Need

Coverage Gap

Current Coverage

Needs Breakdown

Detailed Breakdown