LifePolicyFactsWhy growth matters
A flat multiplication of income times years understates the need, because pay usually rises. This calculator grows each year of income by the rate you enter, then adds up the full stream. The result is the lump sum that would replace every year of that rising income.
Worked example
A 60,000 income growing 3% a year for 15 years adds up to about 1,115,935 in total future income. With 100,000 already in place, the gap is about 1,015,935.
Choosing the years and the growth rate
Match the years to real milestones: until the youngest child is independent, until the mortgage is paid, or until a partner could support the household alone. For growth, 2 to 4% is a reasonable long-run assumption for wages. Enter existing cover and savings so the answer is the gap, not the total.
Frequently asked questions
Should I use gross or net income?
Gross is the common starting point. For precision, use after-tax income and remember the payout itself is usually income-tax-free to beneficiaries in the US.
Does this replace the needs calculator?
It is a simpler sibling. The full needs calculator adds mortgage, debts and education; this one answers the single question of income replacement.
What growth rate should I enter?
Long-run wage growth of 2 to 4% a year is reasonable. Higher rates raise the answer quickly, so stay conservative.
Should my partner's income count?
Only the income your family would lose. If your partner works, enter your income alone, or the household shortfall after their pay.
Is the payout taxed?
In the US, life insurance death benefits are generally income-tax-free to beneficiaries. Rules differ in the UK, Canada and Australia, so confirm locally.