Transparency
Our Methodology
We believe you deserve to know exactly how we calculate your coverage recommendations. Here's the complete breakdown of our formulas and the industry standards behind them.
Important Context
Our calculations are based on widely-accepted industry guidelines and actuarial principles. However, every family's situation is unique. These estimates provide a starting point for understanding your needs—not a final recommendation. Actual coverage decisions should account for your specific circumstances.
Tool #1
Life Score Calculation
How we assess your family's protection readiness
Life Score Formula
Maximum score: 100 points
1. Coverage Adequacy (up to 60 points)
We compare your existing coverage to your recommended amount:
Recommended Coverage = (Annual Income × 10) + (Dependents × $100,000)
Coverage Ratio = Your Coverage ÷ Recommended Coverage
• Ratio ≥ 100%: 60 points
• Ratio 75-99%: 45 points
• Ratio 50-74%: 30 points
• Ratio 25-49%: 15 points
• Ratio 1-24%: 5 points
2. Savings Buffer (up to 25 points)
Emergency savings provide additional security beyond insurance:
• No savings: 0 points
• 1-3 months expenses: 12.5 points
• 3-6 months expenses: 18.75 points
• 6+ months expenses: 25 points
3. Dependent Consideration (up to 15 points)
Families with dependents need adequate coverage for higher scores:
• No dependents: 15 points (full points)
• With dependents + ratio ≥ 75%: 15 points
• With dependents + ratio 50-74%: 10 points
• With dependents + ratio 25-49%: 5 points
Score Categories
80-100
Excellent
60-79
Good
40-59
Needs Attention
0-39
Critical
Tool #2
Coverage Recommender Calculation
How we estimate your coverage needs
Coverage Calculation Formula
Goal-based needs analysis
1. Income Replacement
Based on the DIME method and LIMRA guidelines recommending 10-15x income:
If income replacement selected: Annual Income × 10
Otherwise: Annual Income × 5
Why 10x? This provides approximately 10 years of income replacement, allowing your family to maintain their lifestyle, adjust financially, and potentially build new income sources.
2. Debt & Housing Coverage
Ensures your family isn't burdened by existing obligations:
Monthly Obligations × 12 months × 5 years
Why 5 years? Provides a buffer for your family to restructure finances, potentially pay down or refinance debt, without immediate financial pressure.
3. Children's Education
Based on average 4-year public university costs:
$50,000 per dependent child
Source: The College Board reports average 4-year public university costs around $40,000-$60,000. We use $50,000 as a conservative middle estimate.
4. Final Expenses
Covers funeral, medical, legal, and estate costs:
If final expenses selected: $15,000
Base amount: $10,000
Source: NFDA (National Funeral Directors Association) reports median funeral costs around $7,000-$12,000, plus additional legal and medical expenses.
Coverage Range Calculation
Recommended = Income Replacement + Debt Coverage + Education + Final Expenses
Minimum = Recommended × 70%
Enhanced = Recommended × 130%
We provide a range because coverage decisions involve personal factors we can't quantify—risk tolerance, spouse earning potential, extended family support, etc.
Estimate Mode
How the protection gap estimate works
The gap view reuses the Coverage Recommender calculation — it does not add a new formula
What it does
The gap view takes the coverage figure the Coverage Recommender already produces from your inputs, then subtracts the coverage amounts you enter yourself: employer-sponsored coverage and individually owned coverage, recorded separately. The remainder is displayed as an educational estimate of the difference.
What it does not do
- It does not introduce a new income multiplier or any default formula beyond the calculation documented above.
- It does not state whether employer-sponsored coverage is adequate or inadequate.
- It does not produce a quote, a guaranteed minimum, a suitability decision, a financial plan, or an individualized recommendation.
- It does not fill in figures you have not verified. If any input is unverified, the result stays labelled unknown.
Where the figures come from
Your inputs come from you. Coverage amounts should be taken from your current plan documents, your carrier, or your benefits administrator — not estimated. The underlying calculation and its sources are documented in the sections above and in Limitations below.
Where your answers go
Gap-view entries and worksheet answers stay in your browser. They are not stored, transmitted, or included in analytics.
Plain language
How the estimate works, step by step
Written for anyone reading this for the first time — no formulas required
The estimate in plain language
The protection-gap estimate is arithmetic over information you provide. It compares the responsibilities you chose to include against the resources you chose to count. There is no universal income multiplier and no default formula applied behind the scenes.
How the comparison is made
Selected household responsibilities
minus
Designated existing resources
equals
Potential protection-gap estimate
Responsibilities and resources are compared line by line, in the amounts and time periods you entered. Nothing is weighted, scored, or ranked.
What each input means
- Household responsibilities you select
- Obligations you choose to include, such as housing costs, debts, dependent care, education goals you intend to fund, and final expenses. You decide which ones belong on the list and what each is worth.
- Existing resources you designate
- Amounts you deliberately enter as already in place: employer-sponsored coverage, individually owned coverage, and any other resource your household chooses to count. Nothing is counted unless you enter it.
- Unknown information
- Anything you have not verified against plan documents, your carrier, or your benefits administrator. Unknowns are recorded as unknown, not as zero and not as an estimate.
- Time periods and assumptions you choose
- The number of years a responsibility should be covered, and any other assumption you set yourself. These are your choices, not defaults asserted by SecureNest.
Why unknown values are not treated as zero
Treating an unverified figure as zero would quietly inflate the estimate; treating it as a guess would quietly deflate it. Instead, an unknown stays visibly unknown and is listed next to the estimate so you can see exactly which figures still need verifying. Look them up in your current plan documents or ask your benefits administrator, then run the estimate again.
What the estimate includes
- Responsibilities you selected, in the amounts you entered
- Time periods and assumptions you chose
- Existing resources you deliberately designated
- A visible list of anything still marked unknown
What the estimate excludes
- Anything you did not enter
- Survivor benefits, future earnings, and investment growth
- Taxes, inflation adjustments you did not choose
- Insurance pricing, underwriting outcomes, and approval odds
- Any judgment about whether your coverage is adequate
Why changing an assumption changes the result
Because the output is built from your inputs, adjusting a time period, adding a responsibility, or entering a resource you had previously left blank will move the number. A different result does not mean the earlier one was wrong — it means the inputs changed.
Illustrative example
A fictional household, for illustration only
The figures below are invented for the purpose of showing the arithmetic. They are not a customer story, not a benchmark, and not a suggestion of what any household should enter.
- Responsibilities selected: $220,000 mortgage balance, $30,000 other debts, $60,000 of dependent-care costs over the years chosen, $40,000 education goal, $15,000 final expenses.
- Total selected responsibilities: $365,000.
- Resources designated: $50,000 employer-sponsored coverage (verified in plan documents), $100,000 individually owned coverage.
- Total designated resources: $150,000.
- Potential protection-gap estimate: $215,000.
- Still unknown: whether the employer coverage continues after leaving the employer. It is reported as unknown, not counted as zero and not assumed to continue.
No premium, price, or product is implied by this example.
Limitation
The result is an educational estimate based only on the information and assumptions entered. It is not a quote, guaranteed minimum, adequacy determination, suitability decision, financial plan, or individualized insurance recommendation. Coverage availability, price, and approval depend on carrier and underwriting requirements.
Our Sources
Industry Standards & References
Our methodology draws from established industry guidelines
LIMRA (Life Insurance Marketing and Research Association)
VisitThe 2023 Insurance Barometer Study found that 44% of Americans say they need more life insurance, with the average coverage gap at $200,000.
NAIC (National Association of Insurance Commissioners)
VisitConsumer guidelines recommend coverage equal to 10-15 times annual income for primary earners with dependents.
Society of Actuaries
VisitMortality tables and actuarial standards inform industry-wide coverage adequacy calculations.
Common Industry Methods We Reference
- DIME Method: Debt + Income + Mortgage + Education
- Income Multiplier: 10-15x annual income for primary earners
- Human Life Value: Present value of future earnings potential
- Needs Analysis: Goal-based calculation of specific financial obligations
Limitations & Considerations
What We Don't Account For
- • Spouse's income and earning potential
- • Social Security survivor benefits
- • Existing retirement accounts and investments
- • Potential inheritance or family support
- • Future income growth or career changes
Why Estimates May Vary
- • Regional cost of living differences
- • Individual risk tolerance
- • Specific health conditions
- • Unique financial obligations
- • Personal financial goals
Our tools provide estimates based on general guidelines. For personalized advice tailored to your complete financial picture, consider consulting a licensed financial advisor.
Ready to See Your Numbers?
Now that you understand how our calculations work, try our tools to get personalized estimates for your family.