This life insurance calculator figures the life cover you will need for your family in case something wrong happens to you today by considering your income needs, expenses and assets. There is in depth information regarding the life cover below the web form.

Income needs assumptions
Annual income your family needs if something happens to you today: *
Annual income your family has from sources not dependant on you: *
Number of years for which your family would need the income: *
Assumed rate of return on investments:
Assumed inflation rate percentage:

Expenses needs assumptions
Emergency expenses & funeral expenses:
Current mortgage & other debts:
Assumed college costs:
Other current regular expenses:

Assets owned
Current deposits, savings & investments:
Current retirement savings:
Current other assets owned:

How does this life insurance calculator work?

This is a quick financial application designed to simulate and estimate the life insurance needs by taking account of the data organized within 3 sections:

  • Income needs assumptions – by this category the tool forecasts what is the level of the annual income your family would need without your contribution. The income level has an impact on the estimated life insurance amount.

- Annual income your family would require in case you die;

- Annual income your family has from sources not dependant on you;

- Number of years for which your family would require a specific level of annual income.

- Return rate on investments which is either the annual interest rate for deposits or the percentage of return on investments.

- Assumed inflation rate which is a fixed average yearly inflation percent, that impacts the purchasing power of the annual income needed. These rates are used to compute the net present value of the income required that further on determines the level of the life insurance.

  • Expenses needs assumptions – by this section it is determined what is the expenses level of your family that should be covered in case a bad event occurs.

- Emergency & funeral expenses;

- Current mortgage & other debts;

- College costs which is a rough estimate for the children’s education costs;

- Other current regular expenses representing all the other expenses your family should pay for as they were previously handled by you: for instance child care, yard management, food preparation, home maintenance or repair.   

  • Assets owned – by this category it can be estimated the value that can represent a resource to finance the income needs plus the future expenses.

- Current deposits, savings & investments;

- Existing retirement savings;

- Other assets owed.

The steps performed by the algorithm of this life insurance calculator are:

  • 1st step is to find the totals of the income needed by calculating the net present value;
  • 2nd step is to compute the totals of the expenses and then sum them to the net present value of the income needs previously estimated. The value obtained at this point is the total capital to be replaced.
  • 3rd step is to evaluate the totals of the assets owned and then subtract them from the capital to be replaced. This value is the equivalent of the life insurance policy required, which practically is the estimated contract value you should search for.

Example of a result



Income needs assumptions

Annual income your family needs if something happens to you today


Annual income your family has from sources not dependant on you


Annual income to be replaced


No. of years for which your family would need the income to be replaced


Assumed rate of return on investments


Assumed inflation rate percentage


Estimated income needs adjusted with inflation, to be replaced


Expenses assumptions

Emergency expenses & funeral expenses


Current mortgage & other debts


Assumed college costs


Other current regular expenses


Total capital required to be replaced


Assets owned

Current deposits, savings and investments


Current retirement savings


Other current assets owned


Total assets owned


How much life insurance do I need?

As personal financial advisors recommend the insurance contract should cover the total amount a family should be able to pay for:

  • A mortgage where the case. If applicable this debt is probably the biggest single obligation a family would need to deal with.
  • A car loan or any similar debts such as credit cards or a personal loan if the case;
  • Childcare expenses and college costs;
  • Family’s current expenses as they should keep the existing life standard;
  • Any health illness one or more family members may confront with.

By having a clear image of the total debts and expenses versus the total income and assets your family has you can then by a subtraction estimate the right level of life insurance cover.

02 Dec, 2014 | 0 comments

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