How the calculator works (simple version)

It answers one big question: “If someone in the family dies today, how much money should be in place so the survivors can keep life on track?”

It does this in four steps:

1. Replace the paycheck:
   Decide how many years the family would need steady income and how much per year.
   The calculator turns that stream of income into one lump-sum today using a “real” growth rate (investment return minus inflation). That’s called present value.
2. Add one-time bills:
   Things you’d want fully covered right away—mortgage/other debts, college money, and final expenses.
3. Subtract what you already have:
   Savings/investments already set aside, existing life insurance, and the present value of any survivor benefits (like Social Security).
4. The result = suggested life insurance amount.
   The tool rounds to the nearest $1,000 to make it easy to shop coverage.

Why “present value”? Because money you set aside today can be invested. If your investments grow a bit faster than prices rise, you don’t need to save the full “raw” sum of future paychecks—you need less today to fund those paychecks later.

Example family (California)

• Parents: married couple, both age 50
• Kids: ages 18 and 16
• Mortgage balance: $625,000
• Goal: protect lifestyle until retirement age (say, 67 → 17 years left)
• Annual income to replace: $180,000 (combined)
• Assumptions used by the tool:
  • Long-run inflation 2.5%
  • Net investment return 5.0%
  • Final expenses $15,000 (typical planning number)
  • College fund target $160,000 total (e.g., $80k each)
  • Savings already earmarked $200,000
  • Current life insurance $250,000
  • Survivor benefits (Social Security): $0 in the base run (we’ll show an optional tweak below)

If you are in mid-career stage of the life, it is time to consider retirement planning. Find out different types of life insurances, consumer rights and shopping tips from official resources like the California Department of Insurances. Check and verify a license when you talk to a financial planner.

Step-by-step

1) Capital to replace income (17 years): ≈ $2,480,000
(using the calculator’s present-value math)

2) One-time expenses:

• Mortgage & debts: $625,000
• College fund: $160,000
• Final expenses: $15,000
  Subtotal: $800,000

3) Subtract resources:

• Savings + current life insurance: $450,000

4) Suggested life insurance need (rounded):
$2,480,000 + $800,000 − $450,000 = ≈ $2,831,000

So this family would target about $2.83 million of total coverage across the household.

Optional survivor-benefit adjustment

If you expect, say, $18,000/year of Social Security survivor benefits for ~6 years (until the youngest turns 18), the present value is about $99,000. Subtracting that would lower the need to ≈ $2.73 million.

What a family may receive and how to apply for it? This is an official guide to look for.

How to use this in real life

• Policy length: With a 17-year goal, a 20-year term is a practical fit.
• Split coverage: If both spouses work, split the total between them based on their income share and caregiving roles (e.g., 60/40).
• Laddering (cost saver): Combine a larger 15-year term plus a smaller 20-year term so coverage steps down as kids launch and the mortgage shrinks.
• Review yearly: Update for income changes, college plans, or big purchases/paydowns.

Still thinking why buy a life insurance?

This is an educational estimate. For final decisions, review with a licensed California agent/planner and consider health, insurability, and budget. If you’d like, I can load these exact numbers into the widget defaults for you.

What the other tabs do

• Retirement Gap: Estimates how much lump-sum you’d need today to cover the difference between desired retirement income and guaranteed income (SS/pension).
• Emergency Fund: Quick target for 3–6 months of essential expenses (6–12 months if income is variable or single-income household).