How much life insurance do I need calculator
Ask an insurer how much cover you need and you'll get a number. Ask a broker and you'll get a number. Both of them are paid more if that number is larger.
This works it out from your actual obligations instead: what you owe, what your family would need to keep going, and for how long.
Enter your details in the purple cells. It's your sheet to keep and change.
Why not just use a rule of thumb?
You'll see "ten times your income" quoted a lot. It's a starting point, not an answer, and it can be wildly wrong in either direction.
Someone with no mortgage, no dependants and a working partner may need almost nothing.
Someone with a large mortgage, three young children and a spouse who'd struggle to work full time may need well over ten times. The rule takes no account of either.
What the calculator counts
Funeral costs — more than most people expect
The mortgage, paid off in full
Other debts — car loans, credit cards, personal loans
Children's education, for as long as you'd want it covered
Ongoing living costs for your family, for the years they'd need support
Up to six children, and you set the timeframes rather than accepting a default.
The thing most cover calculators miss
A surviving partner's earning capacity usually drops. They're now doing everything alone. The school run, the sick days, the school holidays. Plenty of people find they can't hold the job they had, or can't work the hours they did. Cover based on "their income continues as normal" quietly assumes a version of events that often doesn't happen.
Worth thinking about honestly when you set the ongoing living costs figure.
Your cover needs should fall over time
This is the part that costs people money, year after year.
When you're 30 with a $600,000 mortgage and two small children, you need a lot of cover.
When you're 55 with $80,000 left on the mortgage, adult children and a decent balance in KiwiSaver, you need far less.
Your obligations shrink and your assets grow.
But premiums rise steeply with age. So if you set your cover at 30 and never revisit it, you end up paying more and more for cover you need less and less.
Review it every year or two. It's the simplest way to save real money on insurance, and nobody is going to remind you. Reducing your cover isn't in anyone else's interest.
Assumptions worth knowing
The mortgage is assumed repaid, whether your family keeps the house or sells it
Future costs are in today's dollars, on the basis that the payout sits in savings and roughly keeps pace with inflation
Any assets you list are assumed to be sold
Want a second opinion?
I don't sell insurance and I'm not paid by anyone who does. If you'd like someone to sense-check your cover, or tell you honestly that you're carrying too much, get in touch for a free 30 minute chat.