How Much Term Life Insurance Do I Need?

Answer a few questions to get a personalized recommendation based on your family's financial picture.

Step 1: Family Profile

Your Age 40

Sex

Male Female

Spouse Age 38

Number of Children 1

Youngest Child Age 5

State

Step 2: Financial Snapshot

Total Investable Net Worth $200,000

Savings, retirement, brokerage accounts. Don't include home equity.

% in Retirement Accounts 65%

401(k), IRA, etc. The rest is assumed in brokerage/savings.

Employer Group Life Insurance $50,000

Usually 1x or 2x your salary. Check your benefits portal.

Spouse's Monthly Income $0/mo

Current or expected income if they work after your death.

Step 3: Monthly Household Budget

How much your surviving spouse + children need per month. Average US household: ~$5,500/mo.

Total Monthly Expenses $5,500

Customize budget breakdown

Step 4: Social Security

Social Security provides survivor benefits to your spouse and children. These are a major source of income.

Use national average estimates I have my SSA statement

Based on national averages (PIA ~$2,400/mo): child benefit $1,800/mo, spouse-caretaker $1,800/mo, widow at FRA $2,400/mo, family max $4,200/mo. These are rough estimates — for accuracy, enter your actual SSA statement numbers.

Find these on your SSA statement at ssa.gov/myaccount under "Survivors" benefits.

Child Survivor Benefit $1,800/mo

Spouse-Caretaker Benefit $1,800/mo

Widow Benefit at FRA $2,400/mo

Family Maximum $4,200/mo

SS Confidence 75%

Trust fund projected to run short ~2033. 75% = expect ~25% cut if Congress doesn't act.

How Much Term Life Insurance Do I Need?

Monthly Survivor Budget

What your surviving spouse + children need per month.

Mortgage/Rent $1,600

Food (groceries + dining) $900

Shopping $300

Travel $200

Utilities $350

Phone $100

Car (insurance, fuel, maintenance) $600

Kids (activities, supplies, childcare) $400

Subscriptions & entertainment $100

Pets $75

Personal & miscellaneous $200

Health Insurance auto

Auto-calculated from income. ACA (under 65), Medicare (65+).

Monthly Total (excl. health) $5,500

Child costs (food, shopping) drop ~30% at age 25 when they're independent.

Use custom monthly total instead

Financial Assumptions

Death Scenario

Investable Net Worth $200,000

% in Retirement Accounts 65%

Net Annual Return 6.0%

6% = conservative balanced. 7-8% = stock-heavy.

Inflation 3.0%

Plan Through Spouse Age 90

Spouse's Monthly Income $0

Employer Group Life ($50K) OnOff

SS Confidence 75%

Sequence-of-Returns Risk OnOff

Override: set face value manually

Portfolio Balance Over Time

Detailed Year-by-Year Analysis

Income Streams Over Time

Year-by-Year Breakdown

Spouse	Child	SS Phase	SS/mo	Spouse Inc	Health/mo	Need/mo	Draw/mo	Tax/mo	Net Inc	Gap	Portfolio

Methodology & Assumptions

What this tool does: It answers one question — "How much 20-year term life insurance should I buy?" It simulates your surviving spouse's financial life from your death through their target age and finds the minimum insurance face value that keeps the portfolio funded the entire time.

How the simulation works

When you die, all insurance proceeds (term policy + employer group life) are deposited into the portfolio as tax-free cash. The brokerage account receives a stepped-up cost basis, meaning no capital gains tax on pre-death appreciation.

Each year, the tool calculates your spouse's total monthly need (budget items + health insurance, adjusted for inflation), subtracts guaranteed income (Social Security survivor benefits + any spouse employment income), and withdraws the remaining gap from the portfolio.

The auto-solver uses binary search ($0–$5M in $25K steps) to find the smallest term face value where the portfolio never runs out through the target age.

Monthly budget & health insurance

The budget sliders represent your spouse's monthly living expenses excluding health insurance. Default values are based on national averages from the Bureau of Labor Statistics Consumer Expenditure Survey.

Health insurance is automatically calculated and added on top of the slider budget:

Under 65 (ACA Marketplace): Premium capped as a percentage of MAGI, scaling from 2% at $20K to 8.5% at $62K+. Benchmark: $850/mo with child, $600/mo single. Below $20K = Medicaid ($0).
65+ (Medicare): Flat $400/mo (Part B + Medigap + Part D estimate).

Social Security survivor benefits

Benefits phase through the following stages based on your family's ages:

Child under 16: Caretaker benefit + Child benefit (capped at family maximum)
Child 16–17: Child benefit continues; widow benefit may begin at spouse age 60
Child 18+: Child benefits end. Widow benefit only (reduced before FRA 67, full at 67+)
Blackout period: If child ages out before spouse reaches 60, there may be years with no SS income

All SS amounts grow at 2% COLA annually. The SS Confidence slider scales benefits to model trust fund solvency risk.

Tax model

Filing status: Head of Household while child is a dependent (under 19): $21,900 standard deduction. Single after: $15,000.
Federal + State: Federal progressive brackets plus state income tax based on your selected state.
Retirement withdrawals: Taxed as ordinary income
Brokerage withdrawals: Stepped-up basis at death. Only post-death gains taxable at 15% LTCG.
Cash withdrawals: Tax-free (insurance proceeds + savings)
Social Security: Partially taxable (50% inclusion $25K–$34K provisional income, 85% above $34K)
Tax gross-up: 3-pass iterative calculation to account for taxes on withdrawals

Withdrawal order

Cash (tax-free) → Brokerage (LTCG on gains only) → Retirement (ordinary income). Minimizes taxes by using the most tax-efficient source first.

Other assumptions

Child independence (age 25): Food and shopping reduced 30%, kids category drops to $0, personal reduced 20%.
Portfolio growth: All accounts grow at the net annual return (default 6%), applied after withdrawals each year.
Inflation: All budget items inflate annually (default 3%).
Term premium: Estimated based on age, sex, and industry average rates for preferred non-smoker, 20-year level term.
Retirement penalty: No 10% early withdrawal penalty. Assumes inherited IRA (no penalty at any age).
RMDs: Not modeled. Living-expense withdrawals typically exceed RMD minimums.

What this tool does NOT model

Remarriage, inheritance, or other windfalls
Long-term care costs
Home sale or downsizing
Mortgage payoff (assumes payments continue for life of loan)
ACA subsidy cliff or policy changes
Medical inflation beyond the general inflation rate