Insurance
Term Life Income Replacement Calculator
Accumulate a nominal income replacement pool, add debts and family goals, subtract available resources, and calculate the additional coverage gap.
Nominal income replacement pool-
Income pool plus lump-sum goals-
Liquid assets, existing coverage and other resources-
Gross need less available resources-
Existing coverage divided by gross need-
Income replacement pool divided by gross need-
Gross need per replacement year-
Decision view
Life-insurance need funnel
Life-insurance need funnelIncome replacement and lump-sum needs build gross need before resources reduce the additional coverage gap.
Exact scenario comparisonIncome replacement years changes while all other entered assumptions remain constant.
| Income replacement years | Nominal income replacement pool | Income pool plus lump-sum goals | Liquid assets, existing coverage and other resources | Gross need less available resources | Existing coverage divided by gross need | Income replacement pool divided by gross need | Gross need per replacement year |
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How to use Term Life Income Replacement Calculator
- Enter income replacement years, income, and growth.
- Enter debts, goals, transition costs, and current resources.
- Use the funnel to see how gross need becomes the additional coverage gap.
Calculator guide
Understanding Term Life Income Replacement Calculator
Income-replacement life insurance planning should keep the income pool, lump-sum goals, existing coverage, and other resources visible before showing the remaining gap.
Calculation method
How the calculation works
Accumulate a nominal income-replacement pool, add explicit lump-sum obligations, and deduct separately entered liquid assets, current coverage, and survivor resources. Use the growing-total formula for replacement income, add lump-sum obligations, add available resources, and floor the additional coverage need at zero.
Detailed calculation process
Build gross household need and subtract available resources
The default replaces $95,000 of income for 15 years with 2.5% annual growth, adds debts, education/dependent goals, final costs, and subtracts liquid assets, existing coverage, and survivor resources.
General formula: IncomePool = I sum_{i=0}^{Y-1}(1+g/100)^iGrossNeed = IncomePool+Debts+Goals+FinalResources = Assets+Coverage+SurvivorGap = max(GrossNeed-Resources,0)CoverageShare = 100 Coverage/GrossNeed The income pool is a nominal growing series. Lump-sum needs are added once, and entered resources reduce the gross need before the final coverage gap is shown.
What each symbol means
Worked substitution with the default inputs
The default additional coverage gap is $1,573,533.03 after $455,000 of entered resources.
Purpose-built visual
Life-insurance need funnel
The funnel shows income pool, lump-sum needs, gross need, resources, and the remaining additional coverage gap.
Worked situations
Practical examples
- The default replaces $95,000 of income for 15 years with 2.5% annual growth, adds debts, education/dependent goals, final costs, and subtracts liquid assets, existing coverage, and survivor resources.
- The default additional coverage gap is $1,573,533.03 after $455,000 of entered resources.
Better inputs
Useful tips
- Separate income replacement, debts, education, final expenses, and other obligations before subtracting available assets.
- Use a replacement horizon consistent with dependents and apply inflation or investment assumptions only where labeled.
- Treat the result as a coverage-need estimate, not a premium quote or a decision about policy type or insurability.
Before relying on the result
Limitations and common mistakes
- Insurance needs are personal and change over time.
- Inflation, investment return, taxes, survivor earnings, benefits, underwriting, and policy exclusions are not solved.
- Professional insurance and estate advice may be needed.
Reference
Key terms
- Income pool
- The total nominal income replacement amount across the selected years.
- Gross need
- Income pool plus lump-sum obligations before resources.
- Coverage gap
- Additional coverage needed after resources are deducted.
Important note
Calculated from the entered values and policy assumptions. The policy contract and insurer review control actual coverage or settlement.
Frequently asked questions
Why does income replacement grow?
The entered growth rate models increasing nominal income needs over the replacement period.
Why subtract existing coverage?
Existing death benefit is already available under the entered assumptions.
Can the gap be zero?
Yes, if entered resources equal or exceed gross need.
Is this a recommendation to buy insurance?
No. It is an arithmetic planning model.