Term life ladder builder

How to use it

1. For each need, type a short name, the dollar amount and the number of years until it ends. There are four rows. The first three start with samples (income replacement, mortgage, college) that you can overwrite.
2. Leave a row empty if you do not need it. Rows without an amount and an end year are ignored.
3. Read the table of policies to buy, the chart of coverage by year, and the comparison at the bottom.

How the math works

A ladder buys several level term policies of different lengths (laddering term life policies to match your needs explains why). The tool builds them from the longest end year down:

1. Sort the distinct end years.
2. For each end year, add up every need that lasts at least that long. Subtract the amount already assigned to longer policies. What is left is the amount of the policy that must run to that year.
3. Round each policy to the nearest $1,000 for display and show the standard length that covers it: 10, 15, 20, 25, 30, 35 or 40 years.

The tool then compares "coverage-years," which is amount times years. One level policy for the total amount carries total × longest end year. The ladder carries the sum of each policy's amount × its length.

Hypothetical example with the starting rows: income replacement of $500,000 for 20 years, a $250,000 mortgage for 25 years and $200,000 for college for 15 years. The tool suggests $200,000 for 15 years, $500,000 for 20 years and $250,000 for 25 years. Year-one coverage is $950,000, stepping down to $750,000 after year 15 and to $250,000 after year 20. A single $950,000 policy for 25 years carries 23,750,000 dollar-years, the ladder carries 19,250,000, which is 19% fewer.

What it assumes

• Each need is a fixed dollar amount that stays the same until it ends. The tool does not model a mortgage balance that falls over time.
• Needs end exactly at the year you enter, and each policy is a level level term insurance policy.
• Fewer coverage-years usually mean a lower total premium. The tool does not price anything, so that claim needs real quotes to confirm.

Where it stops being right

• Each policy carries its own fee, so a ladder is not always cheaper than one long policy. Compare real quotes.
• Buying the rungs in stages risks a health change that raises the price of a later policy. Applying for the whole ladder at once avoids that.
• Longer rungs may extend past an insurer's maximum issue age. Check each insurer.
• A decreasing term insurance policy is a different product: one policy whose benefit falls on a set schedule. The ladder uses separate level policies instead.

Use the How long a term do I need? to find the end years, and the How much life insurance do I need? to size each need. When you collect quotes for each rung, the life insurance quote comparison worksheet helps line them up.