Life Insurance Calculator Expanded – Version 2005.01c

All data entry cell characters are shown in dark red.

The life insurance calculator will help determine how much life insurance is needed, relative to what the family will want to accomplish in the event of an untimely death. Answer the questions and the calculator indicates the appropriate amount of life insurance. Two life insurance models have been included in the advisor version to allow for “his & hers” capability.

Data Entry:

Inflation assumption: This determines how much the survivor’s income will need to increase each year to account for the increase in the cost of living. 3% - 4% is a safe range.

Investment Rate of Return : Indicate the rate of return assumed that the invested insurance benefits will achieve each year to create the survivor’s annual income.

Final Expenses : Indicate here what it is assumed funeral and related expenses will cost.

Debts to be paid off : Self-explanatory. List a total number.

Retirement Assets to be liquidated : Usually (but not always) at someone’s death, any retirement assets they possess (401K plan, Etc.) will be cashed out, and the proceeds become part of the money available to meet the family’s needs. Indicate here the amount if any that will remain from retirement accounts after any applicable taxes have been taken out.

Other Financial Goals to Be Funded : This is a catchall. If you desire a survivor to purchase a new car, for example, indicate the price of such a goal here.

Survivor's Income need : How much income each year do the insurance proceeds need to provide? List that income number in today’s dollars here.

Survivor’s age : List the survivor’s current age.

Survivor Needs Income Until?: List here the age through which an income stream from the insurance proceeds will be needed. This doesn’t have to be for the survivor’s entire life if it is possible that another income source will be available at some point.

Extra Income while children are dependent : Put here any extra income it is assumed survivors will need during the time they still live at home. This assumes a fixed amount (although inflated each year).

Last child leaves home in ___ Years : This is for indicating how long the supplemental income for the children will need to last.

Lump Sum needed to fund child's education : Create these numbers in the Education planner. This is the total amount of money, which if invested today at an assumed rate of return, will grow enough to totally fund that child’s education.

Existing Coverage : On the upper right side of the spreadsheet you can list the current coverage in place. The model then subtracts current coverage from the total insurance need to determine the additional coverage need.

Life Insurance Spending/Investment Plan : This section is an outline of how the insurance money is to be allocated. It will show what is to be spent now and for what purpose. It will indicate what is to be invested to generate the survivor and dependent income streams. This will remove the mystery surrounding how the insurance money is to be used.

Set Print Range to First Page Only & Set Print Range to include Survivor Schedule Buttons : These buttons are included to make life easier. They set the print ranges without your having to know the necessary keystrokes.

Survivor’s Income Schedule : This section outlines year-by-year income to be withdrawn from the investment pool to fund the survivors’ living expenses.

The life insurance calculator print out should be placed in the front cover of the policy it represents. This provides an excellent set of marching orders for the surviving family.