Life Insurance Need Calculator



 
 

Life Insurance Calculator - How Much Do I Need?

Use this life insurance calculator to help you decide how much life insurance you need. It figures the amount of investment capital your family will require at the time of your death to pay for immediate expenses (funeral, bills, etc.) and also provide future income to sustain the household.

Don't trust the commission-hungry life insurance sales representative to know how much coverage you should have! Instead, get an unbiased estimate by answering a few basic questions below...

And if this calculator helped you then please let your friends know with a like, tweet, or +1. Thanks for sharing!

Funeral cost, estate taxes, etc. ($):
Total Debt - Mortgage, cars, credit cards ($):
Amount needed for emergency fund ($):
Amount needed for college fund ($):
Estimated annual living expenses ($):
Surviving spouse's after-tax annual income ($):
Social Security Death Benefit Estimate ($):
Surviving spouse's current age (#):
Total current investments (stocks, bonds, cash):
Expected survivor's investment strategy:
Life insurance needs:

How Much Life Insurance Do I Need?

Life insurance is used to fund the future needs of the surviving family after your untimely death or loss of income.  You buy insurance by paying a monthly, quarterly or annual premium for a defined number of years. To figure out how much life insurance you should have you must use a life insurance calculator because in case of your death, your chosen beneficiary will receive only the amount of money specified. When calculating your life insurance needs make sure to include your immediate funeral expenses but also enough investment capital to secure your family financially after you’re gone.

Who Needs Life Insurance?

Not everyone needs life insurance. For some countries, it is a requirement and for some it is optional. Generally, life insurance is designed for people with dependents to whom they will give financial support even after their untimely demise or loss of income. A dependent could be your spouse, children, parents or siblings who are financially dependent on you. If you are single and you want to cover your own funeral expenses or you may want to leave a legacy to your chosen charity then you may also purchase life insurance.

Why The Need For Life Insurance?

Life Insurance will replace your “financial value” to your family. After you’re gone, you will want your family to receive enough funds to support them for years. It is the responsible thing to do so your family doesn’t end up indigent. Many people are surprised to learn they don’t need permanent insurance policies because they only need to support their dependents until they are old enough to take care of themselves.

Using Life Insurance Calculators To Make The Math Simple

Fortunately, a life insurance calculator makes the process of calculating how much life insurance you need very simple. Just complete a few simple inputs and the calculator will do the rest. The amount of life insurance each person needs varies with each person’s specific situation. There are lots of factors to consider butt the calculator prompts you for each answer. The bottom line is you need to figure out how much your family needs to sustain their current level of spending. That means the starting point is knowing how much money your family needs each month to support current lifestyle. This is not an exact science but there is also no need to just make a wild guess when this life insurance calculator easily solves the problem for you.

Where Do You Buy Life Insurance?

Now that you know how much life insurance you need, the next question is where should you buy life insurance? Should you buy from a pushy insurance salesperson?

Think carefully before you buy your life insurance policy.  A good insurance salesperson can help you find the best insurance policy that is tailored to your needs. Read the insurance policy carefully and make sure that you are aware of the charges for buying a new policy, terminating an existing life insurance policy, and other charges. The devil is in the details. It pays to be an educated consumer. Also, make sure you assess the financial ratings of the company before buying your life insurance policy so that you can have confidence they will be around when it is time to collect.

Term vs. Permanent Life Insurance

Term Insurance is the most straightforward and the cheapest form of life insurance. Just like home and auto insurance, it is a type of insurance that pays off if you die within the specified term limit of the policy. This is important for protecting dependent children and spouses. If the term expires or the term is not renewable, your insurance coverage will expire without paying.

For those who want coverage until death to leave an estate benefit similar to an inheritance then  consider permanent life insurance. The advantage of permanent life insurance is it pays you whenever you die – not just within a specified term limit. There are two types of permanent life insurance:

  1. Universal: This policy is a combination of death benefits with savings components. The biggest portion of the premium will be accumulated as savings and sometimes will be paid as cash at some future point.
  2. Whole: You will be covered during your entire life and it pays out whenever you die. Thus, premiums are more expensive.

Shopping Tips

  • Consider term life insurance, as it is always cheaper than permanent life insurance.
  • Reduce the terms. The longer the term the more expensive the policy.
  • For couples, take a joint life policy. This is more expensive than a single policy but this will give you greater coverage.
  • Buy when you are young. The older you get, the higher your premium.
  • Live a healthy lifestyle. Insurers will calculate your premium by assessing your lifestyle, weight, age and other factors.
  • Do the math and compare insurance quotes. Be a smart shopper.
  • Disclose all your current medical conditions. Not disclosing your illnesses could cause refusal of your pay out.

Lastly, before you go shopping for life insurance, learn the basic insurance terms and know what questions to ask your insurance agent. Don’t rush into buying your life insurance.

Life Insurance Calculator Definitions:

  • Insured – The person whom the insurance policy covers.
  • Death Benefit – The face amount that will be paid to the beneficiary of the insured.
  • Beneficiary – The person appointed by the insured to receive the proceeds after the death of the insured.
  • Premium – The amount paid by the insured on a monthly, quarterly or annual basis.
  • Term – Refers to the period of time coverage is effective.

Questions To Ask Your Insurance Agent:

  • How did you determine how much life insurance I need?
  • What’s guaranteed in the policy?
  • When returns can I expect?
  • What happens if my health condition changes?
  • What is my coverage in case of disability?
  • What happens if I fail to pay my premium?

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