Insurance Coverage Advisor: a practical “coverage stack”

Insurance is not just “buy a policy.” It’s a stack that protects the biggest financial risks in your life so a single bad event doesn’t wipe out years of progress. This advisor turns a handful of inputs into a set of starting-point coverage targets for the most common personal insurance categories: life, disability, health (deductible / out‑of‑pocket), home/renters (property + liability), auto liability, and (when appropriate) an umbrella policy.

The goal is not to replace a licensed agent. The goal is to help you answer three questions quickly:

• What am I trying to protect? (income, dependents, home, savings, future goals)
• How big is the loss if something goes wrong? (debts, replacement costs, medical out‑of‑pocket)
• How much coverage do I already have? (employer benefits, existing policies, current limits)

You’ll get a clear set of recommended targets plus a simple Coverage Confidence Score (0–100). The score is designed for prioritization: if it’s low, it tells you which gap matters most so you can fix one thing at a time.

• Health out‑of‑pocket: can you handle your deductible and likely maximum without debt?
• Auto & home liability: lawsuits can threaten savings; limits are often too low by default.
• Disability: your income is usually your biggest asset; disability is a common blind spot.
• Life (if dependents): replace income + cover debts and near‑term goals.
• Umbrella: add a safety net once you have assets or higher risk exposure.

What the calculator is doing (in plain English)

The advisor uses simple, transparent formulas and conservative defaults. You can override assumptions using sliders. Each number is a starting point so you can compare it to your current coverage and decide what to adjust.

Life Target ≈ (Annual Income × Replacement Years) + Debts + Education Buffer − Liquid Assets − Current Life Coverage

• Replacement Years is typically 10–20 years. This tool suggests a default based on dependents and risk preference, then lets you adjust it.
• Education Buffer is an optional add‑on per dependent (set to $0 if not relevant).
• Liquid Assets are savings/investments you could realistically use if needed.

Monthly Disability Target ≈ (Annual Income ÷ 12) × 0.60 − Current Disability Benefit

Health Cash Target ≈ max(Deductible, Estimated OOP Max) × Family Factor − HSA/FSA Balance

Liability Target ≈ base + (Dependents × add‑on) + (Net Worth Factor) + (Risk Factor)

Umbrella Target ≈ roundUpToNearest($1M, Net Worth + 1–2 years income)

Three quick scenarios

Example A: Single renter, no dependents
Income $70k, debts $10k, assets $20k. Typical outputs: small optional life coverage, disability target near 60% income, renters belongings guidance, and $300k–$500k liability.

Example B: Homeowner with kids
Income $140k, 2 dependents, debts $380k, assets $80k. Life target often approaches a few million; liability rises; umbrella becomes likely as assets grow.

Example C: High earner with assets
Income $260k, assets $900k, higher risk exposure. Liability and umbrella tend to dominate the recommendations.

Frequently Asked Questions

• Is this advice?

  No — it’s an educational estimator to help you spot gaps.

• Why focus on liability?

  Because lawsuit risk can exceed default limits and threaten savings.

• Do I need life insurance without dependents?

  Often optional; consider debts and who would be impacted.

• Term vs whole life?

  This tool estimates needs; product choice depends on goals and cost.

• How accurate is the health estimate?

  Plans vary. Treat it as “can I pay deductible/OOP max?”

• What’s the score?

  A 0–100 indicator of how close your current coverage is to targets.

• How often to re-check?

  After major changes, otherwise yearly.

• Umbrella first?

  Usually raise underlying auto/home limits first, then umbrella.

• Can I use this outside the U.S.?

  Yes as a framework, but adjust to your local market.

• Why ask risk exposure?

  Higher exposure suggests higher liability limits.

Use the output to take action (fast)

Once you see your targets, don’t try to optimize everything at once. Pick one gap and close it. Here’s a simple sequence that works for most households.

• Look up your plan’s deductible and out‑of‑pocket maximum.
• Set an HSA/FSA goal or emergency fund goal to cover the “worst case.”

• Raise auto liability first (many umbrella policies require this).
• Match home/renters liability to your target.

• Confirm employer disability coverage and the elimination period.
• Increase coverage if a long income interruption would be devastating.

• Use term for the “high responsibility years.”
• Re-check when income, family size, or debts change.

This is a planning tool. Insurance is regulated and policies vary widely. Always verify coverage details, exclusions, and required underlying limits.

Use responsibly

Insurance decisions can be complex and regulated. Use this as a checklist to spot gaps, then confirm with a licensed professional. Always read policy exclusions, required underlying limits, and state/country-specific rules.

• Run this once per year (or after major life changes).
• Update your beneficiaries and policy documents.
• Store a simple “insurance folder” so your family can find everything fast.