FREE FINANCIAL TOOLS
Income Replacement Calculator
This calculator will help you determine the amount of lump sum life insurance you should purchase in order
to provide for your family in the event of your death.
Income to be Replaced: Enter your current annual income.
Percent of Income Needed: Estimate how much of your income will be required to maintain your
family's current standard of living. Remember that your family will likely need less than
100% of your current income, because there will be one less person to provide for.
Interest Rate: Estimate a conservative rate of interest that will be applied to the insurance
amount during the years that the replacement paycheque is paid out. Over the last 25
years, this rate has been from six to eight per cent.
Inflation Rate: Enter the expected inflation rate. This data will adjust the insurance
amount to account for inflation, and therefore will give you a more accurate projection of the
insurance amount required. Over the last 25 years, the inflation rate has been around
3 per cent.
Number of Years to Replace: Enter the number of years for which you expect your family to
need an income replacement cheque in the event of your death. For example, you could enter
the number of years until you retire.