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Life Insurance Calculator: Calculate Amount You Should be Insured For

  • Synopsis: Published: 2011-04-24 (Rev. 2015-12-09) - Free online life insurance calculator provides the amount you should be insured for in event of your death accident or disability. For further information pertaining to this article contact: Ian Langtree at Disabled World.

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"Annual income needs equals the total amount your family needs, before taxes, to maintain their current standard of living..."

Life insurance is a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money a "premium" upon the death of the insured person. If you have a family that's dependent on your income, then you need life insurance. The calculator below helps you figure out exactly how much life insurance you should have.

So, how much life insurance do you need?

The answer isn't really how much life insurance you need... it's how much investment capital your family will need at the time of your death. By providing some basic information on your family's resources, debt and expenses, current life insurance coverage and future income needs, the calculator will give you an estimate of the amount of needed life insurance coverage. This calculator assumes your survivors will invest your insurance proceeds and then draw down the account gradually.

Annual income needs equals the total amount your family needs, before taxes, to maintain their current standard of living, typically 60%-75% of total income. Families with higher incomes typically fall into the lower end of that range.

Need a means to support yourself and your family if you become critically ill or die? Critical Illness Insurance cover pays out a cash sum if you're diagnosed with one of the defined critical illnesses or upon your death. Also see our article on Choosing Between Disability Insurance and Critical Illness Insurance

Please remember that the amount of life cover you need should be reviewed regularly and as your financial circumstances change. If you are unsure of the amount of cover you require you should speak to an Independent Financial Adviser.

Calculate how much life insurance you need if your survivors invest the life insurance benefits they receive.

Online Life Insurance Calculator
Funeral cost, estate taxes, etc. All costs required to cover the cost of the funeral:
Amount needed to pay off non-mortgage debt:
Amount needed in emergency fund:
Amount needed in college fund. Amounts you wish to provide your surviving children to cover future college expenses:
Expected average annual living expenses:
Expected spouse's average annual income after taxes:
Annual Social Security Benefits and 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:
Spouse's current age:

Value of current liquid assets ($ total of savings, investments, etc.)

  • 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.
Expected survivor's investment strategy:

Your Life Insurance Needs =


Related:

  1. Critical Illness Insurance Cover for Peace Of Mind
  2. Disability Insurance Claims - Questions and Answers
  3. Insurance - Medical Temporary Health Insurance Plans



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