No gap at your goal
No gap: the life insurance and savings in place already cover this goal, with $48,796 to spare.
No gap: the life insurance and savings in place already cover this goal, with $25,159 to spare.
When an adult dies, the income they earned and the work they did at home stop. The household's costs and plans don't.
How much money the household would need if one of you died, to meet the goal you chose.
How families protect against this. Life insurance protects the people who depend on you, and the income and work at home you provide. It turns a loss no family could save for into a set monthly cost, so the home, your family's plans and daily life can continue.
If one of you died, what should the household's resources do?
We include enough to bring savings up to your emergency-fund goal.
Joe's take-home of $7,500 a month would stop. The household's income would drop from $13,750 to $6,250 a month.
Spending would stay about $10,000 a month. The debts would not be paid off, so their payments would continue until each loan ends.
The household would be short at first ($3,750 a month). After $20,000 of final costs, the $1,950,000 of life insurance and $60,000 of savings in place would cover that for the whole 22 years.
Your goal: Support the household until the youngest child is 24 (22 years).
In place today: $1,950,000 of life insurance and $60,000 of cash and investments.
| + Joe's take-home pay that would stop: $7,500 a month for 22 years — the lump sum needed today to replace it | $1,627,075 |
| − Mortgage payment that ends when it is paid off: $3,160 a month for 22 years (the years of support you chose; the loan has 30 years left) | $569,906 |
| − Other debts payment that ends when it is paid off: $1,500 a month for 4 years 2 months* | $70,516 |
| + Mortgage paid off | $500,000 |
| + Other debts paid off | $75,000 |
| + College, at the estimated cost when each child starts, less college savings | $347,511 |
| Child, age 4: $20,870 a year today, rising 5% a year to $41,321 a year when they start in 14 years, × 4 years | $165,285 |
| Child, age 2: $20,870 a year today, rising 5% a year to $45,557 a year when they start in 16 years, × 4 years | $182,226 |
| + Final costs | $20,000 |
| = What full protection would take | $1,929,164 |
| − Life insurance in place today (including $100,000 through work) | $1,950,000 |
| − Savings in place: $60,000 of cash, less $32,040 kept as the emergency fund | $27,960 |
| = Left over (more than enough) | $48,796 |
These amounts are what you'd need today, all at once. We assume the lost pay would have grown 2% a year, and that the money set aside earns 4% a year while it's paid out. A loan payment is only counted until that loan would have been paid off. We don't count retirement accounts or home equity. College is the estimated cost when each child starts (public, IA, rising 5% a year until then), less what is already saved.
* We estimated the years left on this loan from its balance and payment, leaving out interest. That makes the loan look a little shorter and the amount needed a little higher — so we err on the safe side.
Life insurance through work is counted. It usually ends when the job ends, and it is not counted from age 65.
The death benefit counted from Joe's permanent life policy ($500,000) assumes its long-term care benefits were not used. If its long-term care benefits are used, the policy usually pays less when you die.
Joe's $1,350,000 term life insurance ends in about 30 years. After that it won't help cover this, so the gap grows.
No gap: the life insurance and savings in place already cover this goal, with $48,796 to spare.
This pays off the mortgage, as you chose. If you kept the mortgage and kept making the payments instead, the gap would be $152,106.
There is no gap to close.
| If it happened… | The gap then |
|---|---|
| Today | $0 — no gap |
| In 5 years | $0 — no gap |
| In 10 years | $0 — no gap |
| In 25 years (when Joe would be 60) | $0 — no gap |
These figures include future price rises. We assume costs go up 3% a year and savings keep up with prices, with nothing added. Each debt is paid down by its own payments until the loan ends. Paid household help stops when it's no longer needed. Life insurance through work stops counting at 65.
If Joe died: what the family would need vs what is in place
Jill's take-home of $6,250 a month would stop. The household's income would drop from $13,750 to $7,500 a month.
Spending would stay about $10,000 a month. The debts would not be paid off, so their payments would continue until each loan ends. The household would also pay $3,000 a month for the household help Jill provides.
The household would be short at first ($5,500 a month). After $20,000 of final costs, the $2,000,000 of life insurance and $60,000 of savings in place would cover that for the whole 22 years.
Your goal: Support the household until the youngest child is 24 (22 years).
In place today: $2,000,000 of life insurance and $60,000 of cash and investments.
| + Jill's take-home pay that would stop: $6,250 a month for 22 years — the lump sum needed today to replace it | $1,355,896 |
| − Mortgage payment that ends when it is paid off: $3,160 a month for 22 years (the years of support you chose; the loan has 30 years left) | $569,906 |
| − Other debts payment that ends when it is paid off: $1,500 a month for 4 years 2 months* | $70,516 |
| + Mortgage paid off | $500,000 |
| + Other debts paid off | $75,000 |
| + College, at the estimated cost when each child starts, less college savings | $347,511 |
| Child, age 4: $20,870 a year today, rising 5% a year to $41,321 a year when they start in 14 years, × 4 years | $165,285 |
| Child, age 2: $20,870 a year today, rising 5% a year to $45,557 a year when they start in 16 years, × 4 years | $182,226 |
| + Paying for the household help Jill provides ($3,000 a month for 10 years, as a lump sum needed today) | $344,816 |
| + Final costs | $20,000 |
| = What full protection would take | $2,002,801 |
| − Life insurance in place today (including $250,000 through work) | $2,000,000 |
| − Savings in place: $60,000 of cash, less $32,040 kept as the emergency fund | $27,960 |
| = Left over (more than enough) | $25,159 |
These amounts are what you'd need today, all at once. We assume the lost pay would have grown 2% a year, and that the money set aside earns 4% a year while it's paid out. A loan payment is only counted until that loan would have been paid off. Paid household help is counted rising 3% a year. We don't count retirement accounts or home equity. College is the estimated cost when each child starts (public, IA, rising 5% a year until then), less what is already saved.
* We estimated the years left on this loan from its balance and payment, leaving out interest. That makes the loan look a little shorter and the amount needed a little higher — so we err on the safe side.
Life insurance through work is counted. It usually ends when the job ends, and it is not counted from age 65.
You weren't sure what it would cost to replace the support Jill provides, so we've used $3,000 a month ($36,000 a year) — an estimate. Add your own figure to make this more accurate.
The death benefit counted from Jill's permanent life policy ($500,000) assumes its long-term care benefits were not used. If its long-term care benefits are used, the policy usually pays less when you die.
Jill's $1,250,000 term life insurance ends in about 30 years. After that it won't help cover this, so the gap grows.
No gap: the life insurance and savings in place already cover this goal, with $25,159 to spare.
This pays off the mortgage, as you chose. If you kept the mortgage and kept making the payments instead, the gap would be $175,743.
There is no gap to close.
| If it happened… | The gap then |
|---|---|
| Today | $0 — no gap |
| In 5 years | $0 — no gap |
| In 10 years | $0 — no gap |
| In 25 years (when Joe and Jill would be 60) | $0 — no gap |
These figures include future price rises. We assume costs go up 3% a year and savings keep up with prices, with nothing added. Each debt is paid down by its own payments until the loan ends. Paid household help stops when it's no longer needed. Life insurance through work stops counting at 65.
If Jill died: what the family would need vs what is in place
Each one shows how your result would change if something were different. They are not advice about what you should do.
Try your own what-if
If Joe died 10 years from now
What's in place would cover it — no gap.
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