Life Insurance Calculator

Often less than you are paying for. The classic reasons to own life insurance, replacing a paycheck and paying for children to grow up and go to college, have mostly run their course by your sixties. What is left is narrower: the income a surviving spouse would lose, the debts and costs an estate has to settle, and any fixed sum you want to leave regardless of what markets do.

A household with a paid-down house and a portfolio of $1 million or more can usually carry those needs itself. The calculator is built to show that. Enter only the income that stops at your death, not your whole income, and count the savings you would set aside for your spouse. If the result is zero, you are self-insured, and each existing policy becomes a question of whether its premium buys a legacy you actually want.

With the calculator's defaults (a 64-year-old with a $120,000 mortgage, $30,000 a year of income that would stop, two grandchildren to help with college, a $250,000 term policy and $100,000 of earmarked savings) the net need is $495,000. That is before discounting, as the section below explains, and it assumes none of the retirement portfolio is used. Most readers will find a smaller number once they enter their own figures.

Usually one Social Security check, plus any pension or annuity that ends at your death. That figure, not your total income, belongs in the first box of the calculator.

Social Security. A widow or widower at full retirement age or older receives 100% of the deceased worker's benefit; claiming from age 60 up to full retirement age pays 71.5% to 99% (Social Security Administration). A survivor gets the larger of their own benefit and the survivor benefit, not both. So a couple drawing $3,600 and $1,900 a month becomes a household drawing $3,600, and the survivor loses $22,800 a year. Full retirement age for survivor benefits is between 66 and 67, and is not always the same as for retirement benefits.

Pensions. A single-life pension stops entirely at the retiree's death. A joint-and-survivor pension continues at a set share, such as 50%, 75% or 100%, for the spouse in exchange for a smaller monthly check while both are alive. For most private pensions, federal law makes the joint-and-survivor annuity the default for married participants, and the spouse must sign a written consent, witnessed by a notary or plan representative, to waive it (U.S. Department of Labor).

Retirement accounts. IRAs and 401(k)s do not stop at death. A spouse beneficiary inherits them and can treat them as their own, so they belong in the survivor's resources, not in the income that is lost. The Social Security estimator gives each spouse's projected benefit, and the guide to claiming Social Security explains why the higher earner delaying to 70 also raises the survivor's check for life.

Because it adds up future income at face value. A lump sum paid today earns a return while it is spent down, so the survivor needs less than years times income. The years of income you choose move the answer more than anything else. With the other defaults held constant ($145,000 of debts and final costs, $100,000 of education gifts, $350,000 of existing coverage and savings):

At a 4% return, about $408,000 invested today would pay $30,000 a year for 20 years, compared with the $600,000 DIME counts; enter 4 in the calculator's real-return box to use that present value instead. Many retirees keep the difference as a cushion for inflation, since a pension without a cost-of-living adjustment loses buying power every year while Social Security is adjusted annually. For a sense of how much a fixed payment shrinks over 20 years, see the inflation calculator.

Pick the years by your spouse's likely lifespan, not your own. A healthy 63-year-old spouse can reasonably plan on 25 years or more.

Usually the survivor pension, once you price guaranteed coverage honestly. "Pension maximization" means taking the larger single-life pension and buying a policy to replace it for your spouse. It can work when the insured is in excellent health and insurable at preferred rates, or when the spouse is much older or in poor health. It fails when premiums rise, when a policy lapses after a missed payment, or when the retiree lives long enough that the policy costs more than the survivor option would have.

Run the numbers this way. Find the monthly difference between the single-life and joint-and-survivor options. Work out the lump sum that would replace the survivor pension for your spouse's lifetime; the calculator's survivor-income line gives an upper bound. Then get a guaranteed premium, not an illustrated one, on a permanent policy for that amount. If the premium is not clearly below the pension reduction, take the survivor option. The guide to pension lump sums and annuities covers the related choice of taking the pension as a lump sum, and the Example tab above walks through one couple's decision.

For most readers it helps with liquidity, not tax. The federal basic exclusion for people dying in 2026 is $15 million per person (IRS, 2026), so a married couple can pass far more than that before federal estate tax applies. Some states have their own estate or inheritance taxes with lower thresholds; check yours. Our estate tax calculator shows how close your estate is to the federal line.

Liquidity is the more common problem. When most of an estate is a family business, farmland, a vacation home or rental property, heirs may have to sell quickly to pay debts, taxes or a sibling's share. A permanent policy can provide cash on the day it is needed. It can also equalize inheritances: one child receives the business, and the others receive insurance proceeds of similar value.

Ownership matters. Proceeds are generally free of income tax to the beneficiary (IRS), but a policy you own is counted in your estate, and a policy you give away within three years of death is pulled back in (26 U.S.C. 2035). Families near the exemption usually have an irrevocable trust buy and own the policy. The estate planning guide and the estate planning worksheet cover the rest of the picture.

When no remaining need depends on it and the premium buys nothing you want. Before stopping payments, work through this list:

• Is it term or cash-value? A term policy can simply lapse. A cash-value policy has options: a reduced paid-up policy with no further premiums, a tax-free exchange into an annuity or a qualified long-term care contract (26 U.S.C. 1035), or a surrender. Cash received on surrender above what you paid in is taxable income (IRS Publication 525).
• When does the level premium end? Most term policies renew year to year after the level period at much higher rates. That renewal is the natural time to decide.
• Could it pay for long-term care? An exchange into a long-term care contract can put an old policy's cash value to work on a risk that can drain a retiree's portfolio. See the long-term care planning guide.
• Has the survivor's position changed? Once a spouse has claimed the larger Social Security benefit and the mortgage is gone, the case for coverage is usually much weaker.
• Would it be expensive to replace? If there is any chance you will want coverage later, new underwriting at 70 is harder and costlier than keeping what you have.

We do not sell insurance and earn nothing from any policy you buy or keep. The calculator and this page are meant to help you ask sharper questions of an agent or a fee-only adviser.