Life Insurance Calculator

Insurance is one idea: risk transfer. You hand an insurer a small, predictable premium, and in exchange they take on a loss that is rare but large enough to wreck you — a house fire, a disabling injury, an early death with a family depending on your income. That trade is worth making for catastrophes you could not absorb on your own, and a poor deal for losses you could comfortably pay out of pocket, which is the whole logic behind choosing a higher deductible to lower your premium: insure the disaster, self-fund the dent. Apply that lens and most 'extended warranties' and tiny add-on policies fail it instantly — the potential loss is small, so you're paying a markup to insure something you could just replace. The lesson then drills into the decision where this matters most in dollars: life insurance, and the choice between term and whole life. Term life is pure, cheap insurance — it pays a death benefit if you die within a fixed window (say 20 or 30 years) and builds no savings. Whole life is 'permanent' coverage bundled with a cash-value savings account the insurer credits at a low rate, and it costs several times as much for the same death benefit. The classic counter-move is 'buy term and invest the difference': buy the cheap term, then invest the premium you saved yourself. Because your own low-cost investments typically compound far faster than the insurer's credited rate, that side fund usually ends up dramatically larger than the whole-life cash value would have — and there's a deeper payoff the simulator makes visible: as your investments grow, they eventually exceed the death benefit itself, at which point you are 'self-insured' and can drop the policy entirely. That is term's whole design — cover the years before you've built wealth, then let it lapse once you've outgrown the need. Whole life sells 'permanent' coverage for a problem that is supposed to expire. The durable takeaways: insure only what you genuinely can't self-fund, raise deductibles on what you can, separate insurance from investing rather than paying someone to bundle them, and remember that the goal of life insurance is to make itself unnecessary.

Free and interactive — no sign-up, nothing to install. Read the full lesson for the plain-language explanation.