Frequently Asked Questions
How much income will my family need if I die?
Most planners use 70-80% of pre-death household income for surviving family. Account for Social Security survivor benefits (averaging about $1,100/month for a surviving child in 2024 per SSA), but assume those end when children turn 18.
How long should survivor income cover the family?
Cover until the youngest child reaches financial independence (age 22-25), or until the surviving spouse reaches retirement age. A 30-year coverage horizon is common for young families with kids.
What investment return should I assume on insurance proceeds?
A conservative 4-5% real return (after inflation) is typical for survivor planning, reflecting a balanced 60/40 portfolio. The 4% safe withdrawal rule from Trinity Study research suggests $1M of insurance can sustainably generate $40,000/year.
Why replace 70% of income instead of 100%?
The deceased's own spending stops (food, transportation, clothing), some shared costs drop, and a working spouse can keep earning. The 60-75% range is the usual rule of thumb, but adjust it to your situation: a parent who now has to pay for childcare may need more, while a couple with no dependents may need far less.
Why is the result smaller than the yearly gap times the number of years?
Because the calculator uses the present value of an annuity: the lump sum that, invested at your assumed return, pays out the annual need until it runs out. The capital keeps earning interest while it's spent down, so you need less than the simple product of years times the gap.
What about the mortgage, debts, and college funds?
This calculator covers income replacement only. For a full analysis, use the DIME framework: Debt (consumer debt plus mortgage), Income (this result), Mortgage if you want it paid off entirely, and Education (a college fund per child). Add those pieces to this result to reach the total benefit to buy.
Should I subtract the Social Security and savings I already have?
Yes. Social Security survivor benefits can be substantial for young children and a surviving spouse, and existing savings and insurance reduce the new benefit you need to buy. Estimate survivor benefits at ssa.gov and subtract that income from the calculation to arrive at the net coverage required.
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This calculator provides estimates based on general assumptions. Actual insurance costs and coverage vary by insurer, location, and individual risk factors. Not a quote or binding offer. Contact insurance providers directly for accurate quotes and coverage options.