Calculate how much life or disability coverage you need to fully replace lost income.
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Present value of income = Annual income × [(1-(1+r)^-n)/r] where r = discount rate, n = years to replace. Coverage needed = PV of income - existing assets - existing coverage.
Rule of thumb: 10-15x annual income. More precisely: present value of future income minus assets. Factor in debts, childcare, and spouse's income.
DIME: Debt (all loans) + Income (years until retirement × salary) + Mortgage balance + Education (college for kids). Often yields 15-20x income.
Until financial independence — when your investments can support your family without insurance. Typically 20-30 year term policies for young families.
Term is pure insurance — cheap, high coverage, temporary. Whole life combines insurance with savings at high cost. Use term for income replacement, invest the savings.
Yes, including a stay-at-home parent. Replacing childcare, household management costs $150K+/year in market rates. Factor this into coverage needs.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.