How Much Life Insurance Do You Need?
Here's a quick worksheet to help you get at least a ballpark idea of how much life insurance you might be needing:
A "How Much Life Insurance Do You Need?" Worksheet |
1. Estimated Annual Living Expense Of Survivors (Spouse, children, etc.) |
Estimate 75% of current family living expenses: | $_________(1) |
2. Less Expected Annual Benefits |
A. Social Security benefits: |
$_________ |
B. Survivor's pension benefits: |
$_________ |
C. Survivor's earned income: |
$_________ |
D. Other income: |
$_________ |
Total Expected Annual Benefits: |
$_________ (2) |
3. Net Living Expense Shortage (or Surplus) |
(1) minus (2) = |
$_________(3) |
4. Amount of capital required to cover living expense shortage: |
Inflation adjusted rate of return (example: 8% interest less 3% inflation = 5%) |
__________% |
$___________ (3) divided by ________% = |
$_________ |
5. Plus Other Lump Sum Expenses |
A. Final expenses/estate costs |
$_________ |
B. Mortgage cancellation |
$_________ |
C. Education fund or other |
$_________ |
D. Emergency fund |
$_________ |
Total Lump Sum Expenses |
$_________ (5) |
6. Total Capital Required |
(4) plus (5) = |
$_________ (6) |
7. Less Present Capital |
A. Income producing assets |
$__________ |
B. Present life insurance |
$_________ |
Total Present Capital |
_________ (7) |
8. additional life insurance needed |
(6) minus (7) = |
$__________ |
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How much life insurance do you need?
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