Insurance calculators

DIME adds up the four things a payout has to cover: debts, income, mortgage and education. Building the number from its parts is the point, because it shows which part is doing the work, and a mortgage that is nearly paid off changes the answer far more than any rule of thumb suggests. The income piece is discounted at a real return, so it is the lump sum that would fund those years rather than the raw total of them. The rule of thumb will disagree with it, sometimes by a lot, and neither is wrong: DIME asks what the money is for, the multiple asks what most households in your position end up buying. What this leaves out is the survivors' own earnings, Social Security survivor benefits, and anything an employer keeps paying, all of which reduce the need, and it treats the payout as invested rather than spent. It is an estimate to think with, not a recommendation to buy a policy, and the premium on any figure it produces depends on underwriting, your health and where you live.

Whole life bundles insurance with a savings account. This unbundles it: buy the cheap coverage, invest what you did not spend on premiums, and see where the two land at the end of the term. On the numbers typed in, buy term and invest the difference almost always wins, because the invested money is not paying for a commission, an administration charge and a guarantee. That is the arithmetic, and the arithmetic is not the whole case. Whole life is permanent, so it still pays if you die at 80 when a term policy has long since expired, the cash value is a guaranteed floor rather than a market outcome, and the premium is a forced savings discipline that a lot of people follow and would not follow with a brokerage account. None of that is priced here. The other thing missing is what happens after the term ends, when one side has coverage and the other has a portfolio, so read the ending values as two different things rather than one comparison. Whole life also has real uses this ignores, notably estate liquidity and a dependant who will need support for life. It is an estimate to think with, not a recommendation, and real premiums depend on underwriting, your health and where you live.

Disability coverage replaces income, so the only figure that matters is what lands in your account each month against what leaves it. Who pays the premium decides that. A group policy paid for by an employer pays a benefit that is taxable as ordinary income, so a 60% benefit is really nearer 45% once tax is taken, while an individual policy bought with money you have already paid tax on pays out tax free. That single difference usually moves the number more than the percentage on the front of the policy does. Two other terms do the real work: the elimination period is the wait before anything is paid, which is a job for savings rather than insurance, and the benefit period is how long payments last, where anything short of retirement age leaves the long tail uncovered. This leaves out Social Security disability, which is hard to qualify for and slow, any state program, and the definition of disability itself, which is the clause that decides whether a claim is paid at all. It is an estimate to think with, not a recommendation to buy a policy, and real premiums depend on underwriting, your health, your occupation and where you live.

A health plan has two prices: what you pay every month whether you use it or not, and what you pay when you do. A high deductible plan shifts money from the first to the second, so it wins the quiet years and loses the expensive ones, and the crossing point is the only number worth finding. The HSA is what usually settles it: money in one goes in untaxed, grows untaxed and comes out untaxed for medical costs, it belongs to you rather than to the plan year, and only a qualifying high deductible plan can have one. This ignores everything that is not a dollar figure, and some of it matters more than the arithmetic does. Whether your doctors are in network, whether your prescriptions are on the formulary, and how the plan treats a specialist referral can all cost more than the premium gap. It also assumes every dollar of spending is in network and counts toward the deductible, which out of network care does not. It is an estimate to think with, not a recommendation to pick a plan.

Raising a deductible is a trade of a certain small saving against an uncertain large cost. The break even is simple arithmetic: divide the extra you would pay on a claim by the premium you save each year, and that is how many claim-free years it takes to fund one claim. Claim less often than that and the higher deductible is ahead. The arithmetic almost always favors the higher deductible, because insurers price small claims expensively, and there is a reason for that beyond the cost: claims are what move your renewal price, so small claims you never make protect the premium as well as the deductible. The real question is not the average but the worst month. A deductible you cannot pay from cash tomorrow is a deductible you should not buy, whatever the number says. This assumes claims arrive at an even rate, which they do not, and it leaves out the effect a claim has on your renewal, which can dwarf the deductible itself. It is an estimate to think with, not advice, and every insurer prices this differently.