Amounts in your currency, rates per year.
Per month
Of the household income
Earned on the payout
Enter the income, your share and a rate.
Enter the cover you already have.
0% covered
Fill in the sections above to compare.
This tool sizes the life insurance that would let a family keep receiving your share of the household income if you were no longer there to earn it, and checks how long the cover you already have would last.
It starts with the household's monthly income and your share of it. The cover needed is the capital whose yearly interest, at your rate, equals your yearly share of income. That way the family lives on the interest and the principal is never spent, so the income continues for good rather than for a fixed number of years.
The second section takes the cover you already hold and asks how long it would last if the family drew your monthly share from it while the balance earned interest monthly. If the monthly interest alone covers the draw, it lasts indefinitely; otherwise the tool reports the years until it runs out, and the shortfall against the cover needed.
Enough capital to replace the income you bring in, for as long as the family needs it. The income-continuation method sets it at your yearly share of household income divided by the interest rate the payout could earn. Replacing 40,000 a month at 5 percent means about 9.6 million: invested, it pays that income from interest alone without touching the principal.
A way of sizing life cover by the income it must replace rather than by a multiple of salary or a list of debts. The payout is treated as capital that keeps producing the lost income, so the family's monthly finances carry on as they were.
Enter the cover you hold and the tool runs the drawdown: interest added monthly at your rate, your monthly share of income taken out. It reports the years until the balance is gone, or that it never runs out if the interest alone covers the draw.
Because the cover needed is the income divided by the rate. At 4 percent the same 40,000 a month needs 12 million; at 6 percent it needs 8 million. Use a rate the family could actually earn safely on a lump sum, not an optimistic one.