Deciding how much life insurance to get

Information you’ll need to use the life insurance needs calculator

You’ll need information about the items listed in the 4 categories below. If you don’t know the exact dollar amounts for all these items, you can estimate.

Category 1: Your survivors’ financial obligations

These include expenses your survivors may need to pay right away, such as:

• Burial and funeral costs
• Health care costs (uninsured medical costs)
• Estate taxes
• Other estate-settlement expenses like legal fees

Financial obligations also include any money you and your survivors may owe (existing debts) or may need for planned living expenses, such as:

• Housing costs (your monthly mortgage or rent payments)
• Education costs (like children’s college tuition)
• Car, home equity, or personal loans
• Credit card debt
• An emergency fund for unexpected expenses

Category 2: The annual income available to your survivors

This includes any money your survivors will earn or receive each year from:

• A job
• VA dependency and indemnity compensation (DIC), sometimes called death pension benefits
• Social Security survivor benefits
• A survivor benefit plan
• Dividends and interest
• Other sources (like rental properties, private loan payments from others, or annuities)

Category 3: The annual income your survivors need

This is how much money your survivors will need each year to continue supporting the standard of living you want them to have. Standard of living means level of wealth and comfort. It includes basic needs (like food and housing) and luxuries (like vacations or certain clothes or cars).

The calculator will ask you:

• How much money your survivors will need each year, and
• For how many years they’ll need this income

Category 4: Your survivors’ assets

These are any items of value that may give your survivors a one-time (or lump sum) payment. If you have debts, your survivors may need to use these assets to pay off those debts.

Assets may include:

• Your Thrift Savings Plan benefit
• Current investments
• SGLI, VGLI, or other life insurance
• VA education benefits for qualified dependents
• Other lump sum payments

How the calculator will estimate your life insurance needs

The calculator will use the amounts you enter for each item to determine:

• The net income needed to support your survivors. This is the annual income your survivors need minus the annual income available to your survivors.
• How much life insurance you may need. This is your survivors’ total financial obligations and net income needs minus their assets.

Go to the life insurance needs calculator

Note: Please use this calculator only as a guide. If you need more specific guidance about your situation, contact a financial planner.

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