How much life cover you need to settle debts and replace income for dependants.
Additional cover needed
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Income replacement
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Total cover required
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Building the number from what you would leave behind
Life cover is bought to solve a single, brutal problem: if you died tomorrow, would the people who depend on you be financially secure, or scrambling. This calculator builds the answer the way a good financial planner does, from the ground up rather than from a lazy multiple of salary. It adds three things your death would create or fail to cover, then subtracts what you have already arranged. The result is the genuine gap a new policy needs to fill, not a round number pulled from an advert.
The three building blocks are debts, income replacement, and final expenses. Debts are everything that does not vanish when you do, your bond above all, plus vehicle finance and credit. Income replacement is the salary your dependants would lose, multiplied by the number of years they need it. Final expenses cover the funeral and the costs of winding up your estate. From that total you take off existing cover and liquid assets that could be used. What remains is the cover to buy.
A breadwinner with a bond and two dependants
Work the defaults: R1,200,000 of debt including the bond, R360,000 of annual income to replace over 10 years, R80,000 of final expenses, against R500,000 of existing cover and R100,000 of liquid savings. Replacing gross income, the income block is R3,600,000. Add the debt and final expenses and the total need is R4,880,000. Subtract the R500,000 policy you already hold and R100,000 of savings, and the gap is R4,280,000 of additional cover.
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The chart shows how the total requirement breaks down and where existing resources reduce it.
Replace after-tax income, and mind estate costs
The tool offers a switch from gross to after-tax income replacement, and choosing it is usually wiser. Your dependants live on take-home pay, not on your gross salary, so replacing the after-tax figure is both cheaper and more realistic. On the R360,000 salary above, netting off PAYE drops the annual income to roughly R302,603 under the rates this calculator applies, which cuts the income block to about R3,026,030 and lowers the total cover needed accordingly. That is a smaller, more accurate target.
Two refinements matter at the policy stage. First, the proceeds of a life policy paid to a named beneficiary are generally received free of income tax, but the death benefit can still attract estate duty depending on who owns the policy and who pays the premiums, so structure ownership and beneficiary nominations with advice. Second, the estate itself incurs executor's fees and possible capital gains tax on a deemed disposal at death, which is exactly what the final expenses line is meant to anticipate. Underestimate that line and your family inherits a cash crunch even with a healthy payout. Treat the tax points here as the structure to confirm with SARS and your adviser, not fixed figures.
Should I use gross or after-tax income to size cover?
After-tax is the more accurate basis, because your family replaces the income they actually received, not the pre-tax figure. The gross option exists for a deliberately conservative buffer or where you want the cover to also fund saving and tax on the invested proceeds. For most households the after-tax setting gives a realistic, lower target.
How many years of income should I replace?
It depends on your dependants. A common approach replaces income until the youngest child is financially independent, or until a surviving spouse reaches retirement, which might be anywhere from 5 to 20 years. Longer periods raise the cover needed sharply, so match the term to how long your family would genuinely rely on your earnings.
Does life cover form part of my estate?
It can. If you name a beneficiary, the payout goes directly to them outside the estate's cash flow, but the value may still be included for estate duty purposes depending on the policy structure. Policies payable to your estate are fully part of it. Get the ownership and nomination right, because it changes both the tax and how quickly your family receives the money.