Survivors’ Needs Calculations – Easy Ways to Learn How Much Life Insurance You Need: THE DIE CALCULATOR

Insurance companies have created calculators that offer multiple methods for determining the value of a human life. These methods are:

  1. Debt; Income; Education (D.I.E Calc.)
  2. Survivors’ Needs (the difference between future expenses and income)
  3. Lost Future Family Income (method developed by the federal government)
  4. Multiple of Earnings

In this post, let’s take a look at an example using the DIE Calculator. Debt; Income; Education is a simplified calculation and the inputs are a condensed version of the more complete list of Questions I always ask business owners about their current financial protection plan. Here’s an example based on business owner in the construction industry that I work with regularly:

  • DEBT
    • Financial Obligations of the Business: $350,000 building loan, $225,000 Equipment Debt, $12,300 Accounts Payable, $55,000 credit line, 45,000 vehicle loans, $75,000 3 months payroll
    • Personal Debt (Mortgages, Loans, Credit Card): $300,000 mortgage, $6000 credit card
    • Annual Income Need for Spouse $50,000
    • Number of Years Needed: 20
    • Child #1 Age: 10
    • Child #1 Type of Schooling (public/private) public university
    • Child #2 Age 15
    • Child #2 Type of Schooling (public/private) public university
    • What percentage do you expect to pay? 100%

Total Life Insurance Needs Based on DIE: $ $2,268,300

Less Existing Life Insurance Currently Inforce: $1,000,000

Additional Life Insurance needed based on the DIE Calculator: $1,268,300


This method does a pretty good job figuring out how much life is needed for many small business owners and for the personal needs of individuals outside of business. Once your business reaches a certain size you should consider a more in depth analysis, but if you have nothing in place currently, this is a great place to start!

Next week, we’ll dig into a more popular method for non-business owners: the Survivors’ Needs Analysis.

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Aaron Peacock

Aaron Peacock

Hi, I'm Aaron and I'm a marketing representative for Federated Mutual Insurance Company - a Ward's Top 50 and an A.M. BEST A+ Superior rated insurance carrier. After my wife was severely injured in an accident involving a distracted driver, I've found one of my passions in life is to help educate people about the Danger of Distracted Driving and have started speaking to businesses in Western North Carolina on implementing the Federated Insurance DriveS.A.F.E. program. Click here to read more...