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Life Insurance Calculator

The purpose of life insurance is to replace your income should you die. It ensures that your family will be able to continue living as it does now. To determine how much life insurance you need, you must determine how much money your family will need in your absence over the course of many years.

The following calculator helps you to determine the total amount of life insurance that you will need. You should rerun this calculation each time you have a child or your life changes significantly.

Expenses

Living expenses - Determine how much money your family will need in order to live the lifestyle that they are accustomed to. Make sure that you adjust this number to compensate for any additional expenses that will be incurred should you die.
Funeral expenses - Funeral expenses average between $5,000 and $10,000.
Estate administration expenses - Your spouse may be charged an administration fee of up to 5 percent of your overall asset value for estate handling. After determining your asset value, you can then multiply the number by 5 percent to determine this cost.
Taxes - Depending on your net assets total, your spouse may have to pay up to 40 percent in taxes. An estate lawyer or CPA can offer more information on this expense.
Mortgage and loan payoffs - Your family's life would be much simpler without a mortgage or loans.
College expenses - If you are going to pay for your child's college, enter at least $25,000 per child.
Misc. expenses - Include miscellaneous expenses such as car payments, expenses for children, etc.

Income

Spouse's Income - This value should equal your spouse's after tax income.
Social Security Income - Enter the amount of Social Security benefits that your spouse would receive. These benefits are paid if you have children under age 18 enrolled in school.
Other Income - Enter any income that your spouse will receive from additional sources such as a pension, etc.

Other Information

Years until social security - The number of years until your youngest child reaches the age of 18. If you have no children enter 0 here.
Spouse's age - Enter your spouse's age.
Existing Life Insurance - If you have an existing life insurance policy, list it here.

Click this button to calculate the total amount of life insurance you need.
Total Life Insurance - This is the amount of coverage you need.

If the total life insurance amount is zero or a negative number, you do not need to purchase additional coverage.

Our life insurance calculator is based on several factors, and in order to best work with this tool, you should understand them.

1. It is assumed that life insurance benefits will be saved in a safe investment such as a Certificate or Deposit or High Yield Savings Account.

2. There are no fields for entering retirement accounts such as an IRA, 401K, etc.

3. It is assumed that your spouse will total living expenses of 80 percent of the number entered into the Living Expenses block. Additionally, calculations are based on a retirement age of 65 with a life expectancy of 95.
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