Income Replacement Calculator
Calculate how much life insurance you need to replace your income and maintain your family's standard of living if you pass away prematurely.
Part of our Insurance Calculators collection.
Income Replacement Calculator
Free online calculator
$
Results update automatically as you type
How to Use This Calculator
- 1
Enter your personal details and financial information.
- 2
See the estimated cost or coverage need instantly.
- 3
Adjust inputs to compare different scenarios.
How This is Calculated
Present Value Method (most accurate): PV = (Annual Income / 12) × [(1 − (1+r)^-n) / r] Where r = monthly discount rate, n = months Simple Multiplier Method: Coverage = Annual Income × Years Present value is lower than simple because invested proceeds earn returns.
Example Calculation
See your personalised estimate
Inputs
Result
Enter values above for your estimate
Results update as you enter your information.
Frequently Asked Questions
What percentage of income should life insurance replace?
Most financial planners recommend replacing 70–80% of pre-tax income, since the surviving spouse won't pay income taxes on life insurance proceeds and some expenses (like commuting costs) disappear. Some families need 100% replacement if the survivor doesn't work.
Should I include Social Security survivor benefits?
Yes — your spouse and dependent children may qualify for Social Security survivor benefits. This can reduce the insurance coverage needed. The average survivor benefit is about $1,500–$2,500/month. Contact SSA.gov for your specific estimate.