Life Insurance Affordability Calculator

ANA›Life Services Authority›National Calculator Authority›Life Insurance Affordability Calculator

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Life Insurance Affordability Calculator

Estimate how much life insurance coverage you can afford and how much you may need based on your income, expenses, and financial obligations.

Annual Household Income ($)

Total Monthly Expenses ($)

Total Outstanding Debts ($) (mortgage, loans, credit cards)

Number of Dependents

Years of Income Replacement Needed

Existing Savings & Investments ($)

Existing Life Insurance Coverage ($)

Monthly Budget for Premiums ($)

Your Age

Policy Type

Term Life Whole Life Universal Life

Calculate

function lifCalc() { var income = parseFloat(document.getElementById('lif-annual-income').value); var monthlyExp = parseFloat(document.getElementById('lif-monthly-expenses').value); var debts = parseFloat(document.getElementById('lif-debts').value); var dependents = parseFloat(document.getElementById('lif-dependents').value); var years = parseFloat(document.getElementById('lif-years-support').value); var savings = parseFloat(document.getElementById('lif-savings').value); var existing = parseFloat(document.getElementById('lif-existing-coverage').value); var budget = parseFloat(document.getElementById('lif-budget').value); var age = parseFloat(document.getElementById('lif-age').value); var policyType = document.getElementById('lif-policy-type').value; var resultDiv = document.getElementById('lif-result');

// --- Validation --- var errors = []; if (isNaN(income) || income 80) errors.push("Age must be between 18 and 80.");

if (errors.length > 0) { resultDiv.innerHTML = '' + errors.join('') + ''; return; }

// --- DIME Method: Coverage Needed --- // D = Debts // I = Income replacement (annual income × years) // M = Mortgage (included in debts above) // E = Education / dependent costs ($50,000 per dependent as standard estimate) var educationCost = dependents * 50000; var incomeReplacement = income * years; var totalNeed = debts + incomeReplacement + educationCost;

// Subtract existing assets var netCoverageNeeded = Math.max(0, totalNeed - savings - existing);

// --- Affordability: Estimate coverage from budget --- // Average premium rates per $1,000 of coverage per month (industry benchmarks) // Term: ~$0.06–$0.15/mo per $1,000; Whole: ~$0.50–$1.00; Universal: ~$0.30–$0.60 // This calculator uses age-adjusted rates var ageFactor = 1 + Math.max(0, (age - 30)) * 0.04; // 4% increase per year over 30

var ratePerThousand; var policyLabel; if (policyType === 'term') { ratePerThousand = 0.08 * ageFactor; policyLabel = 'Term Life'; } else if (policyType === 'whole') { ratePerThousand = 0.70 * ageFactor; policyLabel = 'Whole Life'; } else { ratePerThousand = 0.40 * ageFactor; policyLabel = 'Universal Life'; }

// Coverage affordable = (budget / ratePerThousand) * 1000 var affordableCoverage = budget > 0 ? (budget / ratePerThousand) * 1000 : 0;

// Estimated premium for needed coverage var estimatedPremium = (netCoverageNeeded / 1000) * ratePerThousand;

// Coverage gap or surplus var coverageGap = netCoverageNeeded - affordableCoverage;

// Annual expense ratio (monthly expenses as % of income) var annualExpenses = monthlyExp * 12; var expenseRatio = income > 0 ? (annualExpenses / income) * 100 : 0;

// Recommended budget: industry guideline is 5–10% of annual income on insurance var recommendedBudgetLow = (income * 0.05) / 12; var recommendedBudgetHigh = (income * 0.10) / 12;

// Format currency function fmt(n) { return '$' + n.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0}); } function fmtD(n) { return '$' + n.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}); }

var gapMsg = ''; var gapColor = '#27ae60'; if (coverageGap > 0) { gapMsg = '⚠ Your budget covers ' + fmt(affordableCoverage) + ', leaving a gap of ' + fmt(coverageGap) + '. ' + 'Consider increasing your monthly budget to ' + fmtD(estimatedPremium) + '/mo ' + 'to fully cover your need.'; gapColor = '#c0392b'; } else if (budget === 0) { gapMsg = 'No monthly budget entered. See estimated premium below.'; gapColor = '#e67e22'; } else { gapMsg = '✓ Your budget is sufficient to cover your estimated need.'; }

resultDiv.innerHTML = '### Results ' + '' + 'Policy Type' + policyLabel + '' + 'Income Replacement Need' + fmt(incomeReplacement) + '' + 'Debt Coverage Need' + fmt(debts) + '' + 'Dependent Education Fund' + fmt(educationCost) + '' + 'Total Gross Coverage Need (DIME)' + fmt(totalNeed) + '' + 'Less: Savings & Existing Coverage- ' + fmt(savings + existing) + '' + 'Net Coverage Needed' + fmt(netCoverageNeeded) + '' + 'Estimated Monthly Premium for Need' + fmtD(estimatedPremium) + '/mo' + 'Coverage Affordable on Your Budget' + fmt(affordableCoverage) + '' + 'Annual Expense Ratio' + expenseRatio.toFixed(1) + '% of income' + 'Recommended Premium Budget (5–10% rule)' + fmtD(recommendedBudgetLow) + ' – ' + fmtD(recommendedBudgetHigh) + '/mo' + '' + '' + gapMsg + '

'; }

#### Formulas Used

DIME Method — Net Coverage Needed:

Total Need = Debts + (Annual Income × Years) + (Dependents × $50,000) Net Coverage Needed = max(0, Total Need − Savings − Existing Coverage)

Affordable Coverage from Budget:

Affordable Coverage = (Monthly Budget ÷ Rate per $1,000) × 1,000

Age-Adjusted Rate per $1,000/mo: Term Life ≈ $0.08 × [1 + max(0, Age−30) × 0.04] Whole Life ≈ $0.70 × [1 + max(0, Age−30) × 0.04] Universal Life ≈ $0.40 × [1 + max(0, Age−30) × 0.04]

Estimated Premium for Needed Coverage:

Estimated Premium = (Net Coverage Needed ÷ 1,000) × Rate per $1,000

Recommended Budget (Industry 5–10% Rule):

Recommended Monthly Budget = (Annual Income × 0.05 to 0.10) ÷ 12

#### Assumptions & References

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References

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