Life insurance calculator

Not sure what life insurance will cost you? Crunch the numbers with our free, easy-to-use life insurance calculator.

Reina-Marszalek 1600Pat Hanzel

Reina Marszalek & Patrick Hanzel

Published September 24, 2019

Easily figure out how much life insurance will cost you

Ready to shop for life insurance? Whether you’re just getting started or ready to compare and buy, figuring how much you need and what it’ll cost you will help ensure you’re making the right choice. Use our free calculator and tips below to

How to use the calculator

  • Step 1: Enter your age — Rates increase 8-10% each year you put off buying.
  • Step 2: Enter your individual annual income — Life insurance is meant to replace your income, so this is a good starting point.
  • Step 3: If you have a spouse, enter their age and income — Same reason as above, this will help you get a sense of what your total income is.
  • Step 4: Enter the number of kids you have (if any) including the age of the youngest — You’ll want to make sure you have enough coverage for childcare expenses in case you or your spouse doesn't work.
  • Step 5: If you have any household debt, enter the total amount - This is used to determine how much coverage you need in case you’re gone and your loved ones have to continue paying it off.

Once you’ve completed these steps, you’ll get our recommendation for your term length and coverage amount. If you have a spouse, their recommended term/coverage will be included as well. After reviewing those numbers, you can click the button to get instant online quotes and compare policies from over 12 top-rated insurers.

You’ll notice different suggested policy lengths and coverage amounts. Most financial planners suggest covering your longest financial obligation but you do have the option to choose term and whole life insurance. While whole life insurance accumulates a cash value over time, it’s usually **6-10 times** more expensive. Most people opt for term life and look into other means of investing and growing their money.

As Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Financial Planner explains, "Due to the complexity and pricing of whole life insurance policies, term coverage is the recommendation for the vast majority of people. Permanent coverage is usually only suitable for people who have a significant income or assets, complex estate planning needs, or a special needs dependent."

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How much life insurance do I need?

Before we had tools online to help us figure these things out, the first step in getting life insurance was to sit down with a financial adviser or life insurance agent and do a life insurance needs analysis worksheet.

This basically consists of:

  • Adding up your current debts, monthly living expenses and income, multiplying them by the number of years your family would need support and adding any extra financial obligations like college tuition.
  • Subtracting your current assets, the value of any life insurance policies you already own (like group life insurance coverage you may have through work) and any future assets like social security benefits.

The remaining number is the coverage gap — the amount your family would need to be financially comfortable in your absence. This is the coverage amount you should select as the death benefit. The amount of time your family will require coverage is called the term.

Two final things to take into account when making a life insurance calculation:

First, the payment your beneficiaries receive is tax-free, so you can use your after-tax (take-home) pay to calculate your income replacement needs.

Second, remember that the death benefit gets paid upfront, but your beneficiaries won’t use it all at once. Much of it can be invested, and the rate of return can provide additional income to make the benefit last longer. However, you’ll also want to consider the inflation rate over a 20- or 30-year term.

Learn more about how much life insurance you need.

Cost of life insurance

The good news is that most people overestimate the cost of a term life insurance policy by at least 2x to 3x. There are a number of factors that determine your life insurance premium, including:

  • Age: Life insurance is cheaper when you’re young, and increases 8-10% per year
  • Health: Any health conditions or unhealthy habits like smoking make life insurance more expensive
  • Coverage amount: The bigger the death benefit you select, the higher your premiums
  • Term: A 30-year policy costs a bit more than a 20-year term policy

A healthy 30-year-old male who purchases a 20-year term policy with a $500,000 death benefit can expect to pay approximately $28.58 monthly.

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Due to the complexity and pricing of whole life insurance policies, term coverage is the recommendation for the vast majority of people.

- Patrick Hanzel, Advanced Planning Specialist and Certified Financial Planner

How to choose a life insurance company

All life insurance companies offer the same financial protection, and thanks to regulations they’re all guaranteed to pay if the worst happens (with some rare exceptions for self-inflicted injury, fraud and crimes). So how to know what life insurance company you should go with?

Simple: whichever one gives you the best rate. Life insurance companies offer the same product, but they have different methods for measuring risk. One company may see you as risky to insure, while another may see you as a relatively safe bet. Therefore you may get a wide range of life insurance quotes from different providers.

Here’s a look at the rates from 10 different companies for that same 30-year-old male we mentioned above, who is looking to purchase a 20-year term policy with a $500,000 death benefit:

CompanyRate
AIG$25.94
Banner Life$25.80
Lincoln Financial$35.18
Mutual of Omaha$28.17
Pacific Life$25.62
Principal$27.69
Protective$25.81
Prudential$39.38
SBLI$25.97
Transamerica$26.23

So it’s important to compare quotes from as many life insurance carriers as possible before buying a policy. You can use our tool to compare unbiased, accurate quotes from the nation’s top insurers tailored to your specific profile. Get started in minutes today.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.