Calculation Methodology
The Family Protection Gap Calculator compares a planning estimate of selected family obligations with selected life insurance and available resources. It helps make assumptions visible; it does not calculate an exact amount a visitor must buy.
Inputs used by the main calculator
- Annual income and a selected replacement period in years.
- Remaining mortgage balance, other debts, education goals, final expenses, and other financial obligations.
- Available savings and investments, plus existing personal or employer life insurance.
All inputs begin at zero except the editable default income-replacement period of 10 years. Years must be whole numbers from 1 through 40. Money inputs accept nonnegative amounts up to $1 billion.
Formula
Income replacement = annual income × selected years
Estimated family need = income replacement + mortgage + other debt + education + final expenses + other obligations
Available resources = savings and investments + existing life insurance
Estimated gap = max($0, estimated family need − available resources)
The gap cannot fall below zero. The result is an arithmetic estimate from the entries, not a policy amount recommendation.
Illustrative worked example
Suppose a household enters $85,000 annual income, a 10-year replacement period, $240,000 mortgage, $25,000 other debt, $80,000 education goal, $0 final expenses, and $0 other obligations. The modeled need is ($85,000 × 10) + $240,000 + $25,000 + $80,000 = $1,195,000. If it enters $50,000 savings and $150,000 life insurance, available resources are $200,000 and the estimated gap is $995,000.
Illustrative example only. Your situation may be different. If income replacement already includes mortgage or debt payments, adding those balances separately may count the same need twice.
Assumptions and limitations
The calculator uses simple addition and subtraction. It does not model inflation, investment returns, present value, taxes, survivor benefits, policy terms, exclusions, underwriting, premiums, eligibility, or how spending may change. It cannot assess whether assets will be liquid or available when needed. Amounts for childcare, household support, education, and final expenses are chosen by the visitor.
Results vary when inputs or time horizons change. Employer coverage can be subject to plan terms and employment events; inspect current plan documents and ask the plan administrator about eligibility and continuation options. This tool does not decide coverage portability.
Related tools and help
The Employer Life Insurance Gap Checker compares one selected need with employer and individual coverage. The Income Replacement Gap Calculator isolates a simple income scenario. Each tool displays its own formula and limitations. For questions about a personal situation, seek an appropriately licensed or qualified professional; the optional help pathway is not required to use the calculator.
Further consumer reading: National Association of Insurance Commissioners life insurance resources.