Term Life Insurance Calculator
Calculate how much term life insurance coverage you need to protect your family's financial future using the proven DIME method (Debt + Income + Mortgage + Education) recommended by financial planners. This comprehensive calculator determines optimal coverage based on your family's actual needs. Term life insurance provides affordable pure death benefit protection for specific periods—typically 10, 20, or 30 years—making it ideal for income replacement during working years when dependents rely on your earnings. Input your annual gross income and years needed for replacement, outstanding mortgage and other debts, future education costs for children, and final expenses. The calculator totals all financial needs then subtracts existing life insurance coverage and liquid savings to provide personalized recommendations for additional coverage needed, rounded to practical $50,000 increments. Compare with the simplified 10x annual income rule and see estimated monthly premium costs based on typical rates for healthy individuals. Essential planning tool for parents, homeowners, and primary earners ensuring adequate family protection and financial security.
Your gross annual income
How many years of income your family needs
Remaining mortgage or major debts
Credit cards, auto loans, student loans, etc.
College costs for children
Funeral and burial costs
Current life insurance coverage
Savings that could support family
What is term life insurance and how does it work?
Term life insurance provides coverage for specific time period (10, 20, or 30 years) with fixed premiums and guaranteed death benefit. If you die during term, beneficiaries receive tax-free payout. If you outlive term, coverage ends with no cash value. Simplest, most affordable life insurance - pure death benefit protection. Example: $500,000 20-year term costs $25-50/month for healthy 35-year-old. Popular for income replacement, mortgage protection, and ensuring children reach adulthood. Must requalify medically for new policy if renewing after term ends.
How much term life insurance coverage do I need?
Common methods: 1) 10x annual income rule (oversimplified). 2) DIME method: Debt + Income (years to replace) + Mortgage + Education costs. 3) Human Life Value: Future earnings until retirement. Most families need $500k-$1.5M. Considerations: Replace income for dependents, pay off mortgage/debts, fund children's education, cover final expenses ($10-15k), spouse retirement needs. Single with no dependents may need minimal coverage. Primary earner with stay-at-home spouse + kids needs maximum. Decrease coverage as you age and build assets.
What is the difference between term and whole life insurance?
TERM: Temporary coverage (10-30 years), low premiums ($25-100/month), no cash value, pure protection. Expires worthless if you outlive term. Best for: temporary needs (mortgage, young children), budget-conscious, prefer investing separately. WHOLE: Permanent coverage (lifetime), high premiums ($200-500/month), builds cash value, investment component. Never expires if premiums paid. Best for: estate planning, high net worth, guaranteed inheritance. Most people better served by "buy term and invest the difference" - term insurance + index funds typically outperform whole life.
How are term life insurance premiums calculated?
Factors: Age (younger = cheaper), health (medical exam, blood/urine test), gender (women live longer = lower rates), smoking status (smokers pay 2-3x more), coverage amount, term length, family health history, occupation/hobbies (hazardous = higher rates), build (height/weight ratio), driving record, credit score (some states). Example: Healthy 30-year-old male, $500k, 20-year term = $30/month. Same person at 50 = $120/month. Smoker at 30 = $90/month. Lock in rates while young and healthy - premiums fixed for entire term.
Can I convert term life insurance to permanent insurance?
YES - most term policies include conversion rider allowing you to convert to whole/universal life WITHOUT medical exam before certain age (typically 65-70) or before term ends. Benefits: Lock in insurability if health declines, upgrade to permanent coverage when financially stable, no new underwriting required. Downsides: Permanent premiums much higher (5-10x term), conversion deadline pressure, some restrictions on conversion amount. Best use: Diagnosed with serious condition during term, want permanent coverage but couldn't qualify medically. Compare conversion vs new policy if still healthy.
What happens when my term life insurance expires?
Options: 1) Let it lapse if no longer needed (kids grown, mortgage paid, retirement savings sufficient). 2) Renew annually at higher rates (expensive, increases yearly). 3) Purchase new term policy with new medical exam (rates based on current age/health). 4) Convert to permanent policy if conversion option available. 5) Reduce coverage to lower amount. Most people let term expire by design - temporary need (income replacement) no longer exists. If still need coverage, shop new policy 6-12 months before expiration while healthy enough to qualify.
Is term life insurance worth it if I might outlive the policy?
ABSOLUTELY - that's the goal! Term insurance protects against catastrophic financial loss during peak earning years when dependents rely on your income. "Wasted" premiums are actually successful risk transfer - you paid for peace of mind and survived. Example: $500k 20-year term costs $7,200 total ($30/month * 240 months). If you die, family gets $500k (69x return). If you survive, you paid $7,200 to protect $500k+ income earning potential. By term end, ideally you have retirement savings, paid-off mortgage, and grown children - no longer need coverage. Term is insurance, not investment.
How does smoking affect term life insurance rates?
Smokers pay 200-300% more than non-smokers due to significantly higher mortality risk. Example: $500k 20-year term - non-smoker $30/month vs smoker $90/month = $14,400 extra over 20 years. Includes cigarettes, cigars, pipes, chewing tobacco, vaping/e-cigarettes. Most insurers require 12+ months nicotine-free to qualify for non-smoker rates (verified by blood/urine test). Some offer "preferred smoker" rates for occasional cigar users. If you quit smoking, wait 12-24 months then apply for new policy or request rate reclassification with current insurer. Massive savings motivation to quit!
Can I have multiple term life insurance policies?
YES - no limit on number of policies from different insurers (total coverage capped at reasonable multiple of income, typically 20-30x). Common strategies: 1) Layer policies: $500k 30-year + $500k 20-year for $1M coverage while kids young, drops to $500k when older. 2) Employer + individual: Don't rely solely on employer policy (lost if job change). 3) Spouse coverage: Each has own policy. 4) Specific needs: Separate policy for mortgage, education fund. Total premiums and death benefits add up. Each policy underwritten independently. Avoid over-insuring - some companies require financial justification for very high amounts.
What medical conditions affect term life insurance approval?
Impact varies - many conditions still get coverage, just higher rates. APPROVED WITH HIGHER RATES: Controlled diabetes, high blood pressure, high cholesterol, asthma, sleep apnea, depression (stable on meds), past cancer (5+ years remission). DENIED OR VERY EXPENSIVE: Active cancer, recent heart attack/stroke, severe diabetes, organ failure, HIV/AIDS, substance abuse. TIMING MATTERS: Apply when conditions well-controlled. Wait periods help (e.g., 2 years post-heart surgery). Guaranteed issue (no medical exam) policies available but very expensive. Work with independent broker who shops multiple insurers - approval standards vary significantly.
How long does the term life insurance application process take?
Timeline: 1) Online quote: Instant. 2) Application submission: 15-30 minutes online. 3) Medical exam scheduling: 2-5 days. 4) Paramedical exam (blood/urine): 30 minutes at your home/office. 5) Underwriting review: 2-6 weeks (longer if medical records requested from doctors). 6) Policy approval and delivery: 4-8 weeks total. ACCELERATED UNDERWRITING (no exam): Some insurers offer instant approval up to $1M for healthy applicants under 50 - decision in 24-48 hours. Provide accurate health info - misrepresentation can void policy. Start process 2-3 months before needed coverage date.
Does term life insurance cover suicide or dangerous activities?
SUICIDE: Most policies have 2-year contestability period - if suicide occurs within first 2 years, only premiums refunded. After 2 years, suicide covered (death benefit paid). DANGEROUS ACTIVITIES: Standard policies exclude: war/terrorism, aviation (non-commercial pilot), rock climbing, skydiving, scuba diving below certain depths, racing. Can purchase riders for hazardous activities (higher premiums). ACCIDENTAL DEATH: Fully covered (car accident, drowning, falls, etc.). MURDER: Covered unless beneficiary involved. NATURAL DEATH: Always covered. READ EXCLUSIONS CAREFULLY - vary by insurer. Lying about dangerous hobbies can void policy.