A life insurance is a contract by which an insurer agrees to indemnify a certain amount of money to a beneficiary, in the case of death of the insured. Also, it is usually common for the insurer to indemnify a certain amount of money in case the insured, for any reason, would be in such a situation that he could not work anymore (known as absolute professional disability). The compensation can be in the form of an immediate capital or monthly income during a certain period.
To get a precise coverage calculation, you must do your homework, but it is worth a try. You can start by collecting all your current and planned expenses, including your daily needs like food and utilities (you may want to make an estimate of what percentage of your current income your loved ones would need to cover these expenses), as well as the higher costs Such as debts, housing, day care, education (do not forget future registrations!) And you should not forget to include your funeral expenses.
Then, add your assets, such as your bank accounts, investments, retirement accounts, certificates of deposit (CDs) and existing life insurance.
Then, subtract your total expenses from your assets and the resulting amount will give you an idea of the amount of life insurance you will need.
To calculate all these more easily, you will need a life insurance calculator. It will save you a lot of headaches and give overview of what is needed from you and what would likely be your commitment over the years.
When you take time to painstakingly calculate your life insurance needs, you can be sure that your family will receive adequate care if you die suddenly. Calculating your needs also prepares you for discussions with life insurance agents or companies, so you buy the right amount of coverage you need – no more, no less. Use the life insurance calculator to decide what kind of insurance is right for you and take time to determine which option is best for you. With the life insurance calculator, you will know how much you need without any need for guesswork.
If you have loved ones who count on you to care for them, you should have life insurance to cater for your family members and dependents. But, how much do you need? There are some questions to ask yourself to determine the best life insurance for you, and you’ll be able to get an estimate of how much life insurance coverage would be best for your situation. Some of the questions include but not limited to the following:
- How much money will be needed to cover your burial expenses?
- For how many years into the future will your income need to be replaced?
- How much annual net income will your survivors need?
- Do you have any children who may go to college?
- Are there any one-time expenses you wish to fund (wedding, new car, home improvement)?
- How much in liquid or semi-liquid investments do you have available?
Each of your answers to the questions above will be considered and weighed individually based on the experience of the insurance experts.
Based on your projected financial needs, and the periods in time when that money would be required, you would have been able to determine the approximate amount of life insurance you need today.
Life insurance calculator can save you a lot of stress. Why not put it to use to enjoy all the associated benefits. The opportunities that it avails are enormous.