This life insurance calculator can help you estimate your life insurance needs by taking account of your family’s income, expenses and assets. There is in depth information on how to determine your life insurance cover below the form.


Income

Your family’s annual income needs if you die today:
$
Annual income your family receives from stable sources without you:
$
Your family’s annual income needs to be replaced:
$
No. of years the annual income needs to be replaced:*
Total capital needed for income:
$

Expenses

Funeral costs and other associated expenses:
$
Mortgage balance left to be paid:
$
Car loan debts left to be paid:
$
Credit card debts left to be paid:
$
Other debts left to be paid:
$
College funds (capital to finance child’s education):
$
Total capital required:
$

Assets

Existing savings or deposits balance:
$
Existing investments (e.g: bonds, other financial assets):
$
Existing retirement savings:
$
Existing amount from other life insurance:
$
Other assets:
$
Total assets value:
$

How does the life insurance calculator work?

This is a financial tool that might come in handy when trying to figure out how much life insurance you need for your family, by considering the income needs, expenses level and assets as explained in the scheme below:

  • Income analysis in order to determine the life insurance needs

- Your family’s annual income needs if you die today represents the yearly amount of money your family would need to maintain its standard of living (please note that this is the income needed to cover life expenses and NOT any debts) on a what if scenario. Usually the annual income needs vary between 55% and 70% from total income.

- Annual income your family receives from stable sources without you is the income your family can ensure from stable sources except of you. For instance such sources can be spouse’s salary/stable income or fixed pension. Please consider that in this amount you should not include any assets your family owns because they should not be considered as stable income, but rather an occasional source.

- Your family’s annual income needs to be replaced is an indicator that is calculated automatically by subtracting the “Annual income your family receives from stable sources without you” from “Your family’s annual income needs if you die today”.

- No. of years the annual income needs to be replaced represents the period for which the annual income needs to be replaced, and can take values from 5 to 40 years.

- Total capital needed for income is also an automatically computed field, obtained by multiplying the value from “Your family’s annual income needs to be replaced” by a corresponding factor in direct relation with the “No. of years the annual income needs to be replaced”. The factors depending on the term are:

* 5 years has the factor 4.5

* 10 years has the factor 8.8

* 15 years has the factor 12.4

* 20 years has the factor 15.4

* 25 years has the factor 18.1

* 30 years has the factor 20.4

* 35 years has the factor 22.4

* 40 years has the factor 24.1

  • Expenses analysis in order to forecast the life insurance needs

- Funeral costs and other associated expenses are an onetime cost.

- Mortgage balance left to be paid represents the current loan balance left to pay by your family.

- Car loan debts left to be paid is considered the current auto loan principal your family has to pay in the future.

- Credit card debts left to be paid in case there is a negative balance on your CC.

- Other debts left to be paid if applicable.

- College funds (capital to finance child’s education) where applicable.

- Total capital required is a figure which is calculated automatically by adding all the values from:  Total capital needed for income + Funeral costs and other associated expenses + Mortgage balance left to be paid + Car loan debts left to be paid + Credit card debts left to be paid + Other debts left to be paid +College funds (capital to finance child’s education).

  • Assets analysis in order to determine the life insurance needs

- Existing savings or deposits balance.

- Current investments (e.g: bonds, other financial assets.

- Any retirement savings accounts or plans.

- Existing amount from other life insurance policy.

- Other assets.

- Total assets value is computed automatically by adding these values:  Existing savings or deposits balance + Existing investments (e.g: bonds, other financial assets) + Existing amount from other life insurance + Other assets.

This life insurance calculator will display the following relevant information:

  • Your family’s income needs in case you would died today: [A]
  • Your family’s expenses: [B]
  • Your family’s assets: [C]
  • Life insurance needed: [D]

Where:

[A] = value from “Total capital needed for income”

[B] = value from “Total capital required”

[C] = value from “Total assets value”

[D] = [B] – [C]

Life insurance definition

Generally speaking this is a measure taken by an individual to protect against the income loss that would result if the insured passes away. It is an agreement signed between two parties: one is the owner of the life insurance contract and the other party is the specialized financial entity. Within this agreement the two parties establish whom will be the beneficiary that will receive the proceeds in case of insurer’s death.

The role of this product is to provide financial security for insurer’s family, thus before signing for a life insurance policy, it is recommended to first make a strong analysis of the current financial status.

Example of a calculation

Let’s assume one scenario and check its results:

Income
Your family’s annual income needs if you die today: $80,000.00
Annual income your family receives from stable sources without you: $50,000.00
Your family’s annual income needs to be replaced: $30,000.00
No. of years the annual income needs to be replaced:* $15.00
Total capital needed for income: $1,528,076.80
Expenses
Funeral costs and other associated expenses: $5,000.00
Mortgage balance left to be paid: $65,000.00
Car loan debts left to be paid: $7,000.00
Credit card debts left to be paid: $1,500.00
Other debts left to be paid: $1,000.00
College funds (capital to finance child’s education): $25,000.00
Total capital required: $1,632,576.80
Assets
Existing savings or deposits balance: $55,000.00
Existing investments (e.g: bonds, other financial assets): $20,000.00
Existing retirement savings: $70,000.00
Existing amount from other life insurance: $0.00
Other assets: $0.00
Total assets value: $150,000.00

Results:

Your family’s income needs in case you would died today: $1,528,076.80.

Your family’s expenses: $104,500.00.

Your family’s assets: $150,000.00.

Life insurance needed: $1,482,576.80.

11 Feb, 2015 | 0 comments

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