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Financial Calculators - Life Insurance Calculator

Life Insurance Calculator

(more calculators)

How much life insurance do you need? Enter your current assets, expenses, income and let us determine how much life insurance you need. You can also adjust the inflation rate and your expected rate of return to see how these variables can impact your current and/or future life insurance needs. Click on the "View Report" button to see a complete year-by-year breakdown of your family's future income and expenses.

*Both the future expenses and future income totals are expressed as the amount of cash required today, invested at your expected rate of return, to equal the total future cash flow. For example, if you are expecting to receive $1,000 in exactly one year, that $1,000 has the same value as $909 today invested at 10%. Our totals show these current amounts to calculate the life insurance you require today to help cover your future expenses after your future income is taken into account.

Income and expenses**

**REPEATING GROUP**

**Please note that interest income in the above schedule is calculated at AFTERTAX_RATE, which is your after tax annual rate of return.

This Financial Calculator requires SUN's Java™ Plug-in. If you see this message you will need to download SUN's Java™ Plug-in. This can be done automatically by clicking the yellow bar at the top of your browser and choosing “Install ActiveX Control”.

Get the Java™ Plug-in!

For more information about this Plug-in please visit: SUN's Java™ Plug-in
For more information these financial calculators please visit: Financial Calculators from KJE Computer Solutions, LLC

Definitions

Current life insurance coverage
Total amount of life insurance coverage you currently have for yourself.

Years for insurance income to last
Number of years your spouse will need to use your insurance proceeds to provide for living expenses and income.

Inflation rate
What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2007. The CPI for 2007 was 2.4%, as reported by the Minneapolis Federal Reserve. Your total expenses are increased by this rate for each year you require income. The income you would receive from your life insurance policy is used to cover any shortfalls between your expected income from all sources and your expenses.

Return on investments
The annual rate of return for your investments. The actual rate of return is largely dependant on the type of investments you select. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, and the lowest was -39%. Savings accounts at a bank can pay as little as 1% or less.

It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment.

Income tax
This is your income tax rate. Changing this rate only affects your interest income from your investments. All other income and expenses should be entered on an after tax basis.

Cash and savings
Total you have in cash, checking accounts, savings accounts or other accounts that can be used to help cover expenses.

Home equity
Total amount of equity in your home that you are willing to use toward your living expenses. Only include the home equity that you consider available to use toward your living expenses. For example, the equity you would make available by selling your home and moving into a smaller one.

Investments
Total value of all investments that you are willing to use toward your living expenses.

Other
Any other assets that you may be willing to sell or liquidate.

Estate or inheritance taxes on assets
Taxes that are required to be paid on your assets at death.

Probate costs
Probate costs cover a state's legal fees for disbursing the assets of the deceased. You may incur significant probate costs, depending on your state of residence, even if you have a will.

Funeral costs
All costs required to cover the cost of the funeral.

Uninsured medical costs
Any medical costs that are not covered by your medical insurance. Make sure to include any deductibles.

Debt repayment
Credit card debt, auto loans, home equity loans, mortgages or other debt that you wish to repay. Providing the ability to repay these loans if you were to die can significantly help your family meet its monthly living expenses.

Other expenses
Any other items that you need to pay with your insurance proceeds.

College fund for children
Amounts you wish to provide your surviving children to cover future college expenses.

Spouse income from work
Income expected from your spouse after your death. If your spouse needs education or retraining, make sure that the starting year for this income provides adequate time to complete.

Social security survivor benefits
Depending on your work history, your family may qualify for Social Security benefits. Typically Social Security benefits for the Widow/Widower cease when the youngest child turns 16. The child's benefit generally continues to age 18. Once the children are gone, Social Security benefits are generally not available until the Widow/Widower turns age 60.

Living expenses with children at home
Total monthly expenses while your children are living at home. This should include all monthly expenses except child care.

Living expenses with children gone
Total monthly expenses after your children have left home. This should include all monthly expenses.

Children's education expenses
Monthly expenses for your children's education expenses. If your children have not yet entered college, and have no other educational expenses, leave this amount at zero and enter an amount in the college fund entry fields in the total expenses at death section.

Retraining and education for spouse
Monthly expenses expected to cover any cost of education or retraining for your spouse to re-enter the workforce.

Other expenses
Any other monthly expenses not included above.

Savings balance
The amount of funds available to your family after your expenses at death have been covered. This includes any current life insurance.

Latest Life Insurance Articles

How your lifestyle can affect your life insurance premium
Did you know that different aspects of your lifestyle can have an effect on how much life insurance premium insurance companies charge you? Aside from your age and medical history, other aspects that can have an effect on life insurance costs include your habits, line of work, hobbies/recreational activities, and more. Read more

Questions to ask before getting a new life insurance policy
You should try to approach the analysis of new life insurance coverage from a business, not a personal, perspective. Life insurance is a very personal decision, but you should consider the components with as much factual and professional evaluation as possible. Here are some questions you should ask your agent before you purchase new coverage. Read more

Ultimate guide to buying life insurance
Buying life insurance to protect your family can be a daunting task. You know it's important, but you're plagued with questions. How much should you buy? What kind of life insurance is right for your situation? How can you do this without getting ripped off? You need the answers to these questions before you make any decisions. Read more

Read the fine print on your life insurance policy
Even though the basic provisions of life insurance are clear, there may be other conditions, exclusions, and/or guarantees that often reside in the fine print. Here are some issues that you should examine in the terms of new life insurance coverage both before and after getting a policy. Read more

:: More Life Insurance Articles

Latest Life Insurance Tips

Review your life insurance coverage
If it has been more than a few years since you purchased your life insurance policy it may be time for an insurance checkup. Read more

Go green and save green
One of the easiest ways to save a little money on insurance premiums is by making some easy green choices. Read more

:: More Life Insurance Tips

Life Insurance FAQs

:: More Life Insurance FAQs

Note: This information is for general use only. Use this information as part of a full research process. General financial advice does not always apply directly to individual financial matters. Please consult a financial expert with specific and complex questions about your individual situation.

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