Insurance Gap Analysis Calculator Formula
Understand the math behind the insurance gap analysis calculator. Each variable explained with a worked example.
Formulas Used
Life Insurance Gap
life_gap = max(income_need - current_life, 0)Property Coverage Gap
property_gap = max(total_assets - current_property, 0)Total Insurance Gap
total_gap = max(income_need - current_life, 0) + max(total_assets - current_property, 0)Overall Coverage Ratio
coverage_ratio = (income_need + total_assets) > 0 ? (current_life + current_property) / (income_need + total_assets) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
total_assets | Total Assets at Risk(USD) | 600000 |
income_need | Income Protection Needed(USD) | 500000 |
current_life | Current Life Insurance(USD) | 250000 |
current_disability | Annual Disability Benefit(USD) | 30000 |
current_property | Current Property Coverage(USD) | 350000 |
How It Works
Insurance Gap Analysis
A gap analysis compares what you NEED versus what you HAVE.
Steps
1. Identify risks: Death, disability, property loss, liability 2. Quantify each risk: How much would each event cost? 3. Inventory current coverage: List all existing policies and limits 4. Calculate gaps: Need minus current coverage
Coverage Ratio
Coverage Ratio = Total Current Coverage / Total Coverage Needed x 100%
Aim for 100% or higher across all categories.
Worked Example
$600,000 assets, $500,000 income protection needed, $250,000 life insurance, $350,000 property coverage.
total_assets = 600000income_need = 500000current_life = 250000current_disability = 30000current_property = 350000
- 01Life insurance gap = $500,000 - $250,000 = $250,000
- 02Property gap = $600,000 - $350,000 = $250,000
- 03Total gap = $250,000 + $250,000 = $500,000
- 04Coverage ratio = ($250,000 + $350,000) / ($500,000 + $600,000) = 55%
Ready to run the numbers?
Open Insurance Gap Analysis Calculator