There are two well-established ways to size a death benefit — the Human Life Value method and the needs-based method. Below you'll find a working calculator for each, an explanation of when to lean on which, and an honest note on the coverage these numbers don't include.
Both calculators size a death benefit — the lump sum your family receives if you pass away. They do not size disability, critical illness, or long-term care coverage. A complete plan addresses those too. More below.
These are planning estimates to frame the conversation. Your real number depends on tax treatment, existing group coverage, business interests, and goals. Confirm with a qualified advisor before buying or cancelling any policy.
Neither method is "right." They look at your life from different angles — one measures the economic value of your future earnings, the other tallies the specific obligations your family would have to meet. In practice, a good plan looks at both and reconciles them.
An economic view. It treats your future earning power as an asset and calculates today's value of all the income you'd contribute to your family between now and retirement — discounted back to a present-day lump sum.
Best when you want to replace a breadwinner's full lifetime earnings, or you're comparing against the maximum an insurer would issue. It tends to produce a larger, more generous figure.
A goals view. It adds up the concrete costs your family would face — final expenses, debts, the mortgage, years of income replacement, education — then subtracts what you already have in savings and existing coverage. What's left is the gap.
Best when you want coverage tailored to real obligations rather than a formula. This is the approach most planners build a recommendation around.
This capitalizes the income you'd dedicate to your family over your remaining working years. Enter your after-tax income, the share you spend on yourself (which disappears at death and isn't replaced), and reasonable assumptions for raises and a discount rate.
The present value of the income you'd contribute to your family over 25 years. Think of it as the upper end of the coverage conversation.
Sometimes called the DIME method — Debt, Income, Mortgage, Education. Add up what your family would need to cover, then subtract the resources already in place. The difference is the coverage gap a policy would fill.
The additional life insurance that would close the gap between what your family needs and what they already have.
Through your working years, you are statistically more likely to face a disability or a serious illness that interrupts your income than to die before retirement. Life insurance pays nothing in those scenarios. The mortgage, the groceries, and the cost of care all continue — while the paycheque stops.
That's why a complete protection plan looks beyond the death benefit to living benefits: disability insurance to replace income if you can't work, critical illness insurance for a lump sum on a serious diagnosis, and long-term care for later in life. Sizing these is a separate exercise — one these calculators deliberately don't attempt.
As a Certified Health Insurance Specialist (CHS), this is exactly the gap Elias is trained to close. The life insurance figure above is a great start — let's make sure the rest of the plan is just as solid.
Bring your figures to a relaxed, no-obligation conversation. We'll refine them against your real situation — and make sure living benefits are part of the picture.
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