Comprehensive Life Insurance Calculator
- Last Updated: Sunday, 18 November 2018
This comprehensive life insurance calculator can be used to get a fairly detailed estimate of how much life insurance you need. The calculator breaks down insurance requirements into several categories including basic living expenses, significant future expenses, outstanding debt, and assets. Based on your stated needs and present assets, the calculator is able to provide an estimate of any unmet additional life insurance needs.
The variables used in our online calculator are defined in detail below, including how to interpret the results.
Basic Living Expenses
In this first section of the calculator, you’ll be asked to input some of your basic living expenses such as mortgages, rent, and childcare.
Monthly Mortgage Payment ($ / Month)
If you’re a homeowner, this calculator provides you with two options. The first is to include your monthly mortgage payment and have that monthly amount included for the years of coverage you’ll be entering later on. Alternatively, you can use your life insurance proceeds to pay off the outstanding balance on your mortgage later on; in that case enter zero here.
If you decide to include your monthly mortgage payment, just make sure the years covered does not exceed the years remaining on your mortgage. Also do not include your property taxes in this value; you can include that later in the Other Basic Expenses.
Monthly Rent ($ / Month)
If you are presently renting a home or an apartment, then enter the amount of your rent here.
Monthly Living Expenses ($ / Month)
Your monthly living expenses would include food, clothing, home repairs, and entertainment expenses. For an average family of four, this value should be around $2,200 per month.
Child Care Expenses ($ / Month)
This is the monthly expense associated with childcare. Again, pay careful attention to the number of years of basic coverage later on when entering this value. For example, your life insurance needs should not include 20 years of childcare coverage.
Insurance Expense ($ / Month)
This monthly insurance expense includes medical insurance, car insurance, homeowner’s and long term care insurance.
Other Basic Expenses ($ / Month)
Other basic expenses could include costs such as property taxes or tuition to grammar schools and high schools.
Years of Basic Expenses Covered (Years)
This is the number of years you want to cover basic expenses. We’ve talked about some things you’d want to consider earlier. For example, you will not have child care expenses for 20 years, or you may decide to go back to work after children have left the home.
Significant Future Expenses:
In this next section, you’ll be asked a series of questions dealing with some of the significant future expenses you might encounter.
Number of Children
This is the number of children that is used to calculate the total college expenses in the following line item.
College Tuition ($ / Year)
This is the annual amount of college tuition paid for each child identified above. The average cost of a public education is around $10,000 per year, while the average cost of a private college is around $30,000 per year.
Children’s Wedding ($)
If you’re planning on contributing to a child’s wedding expenses, then enter that amount here: the total for both children. Typical wedding costs are nearly $25,000.
Funeral Expense ($)
Typical funeral expenses are around $8,000 to $12,000.
Eldercare for Parents ($ / Year)
If you’re planning on providing eldercare for your parents, then enter that amount here. Eldercare can average in the neighborhood of $70,000 per year.
Years of Eldercare (Years)
This is the number of years of eldercare that you want to provide.
Outstanding Loans and Debt:
In this next section of the calculator, you’ll be asked a series of questions dealing with any outstanding loans and/or debt.
Credit Card Balance ($)
This is the balance you typically carry on a credit card. This is not the amount you charge each month, rather the balance you’d like to pay off using insurance proceeds.
Car Loan Balance ($)
If you have a car loan and want to pay off the loan, then enter that amount here.
Home Equity Loan Balance ($)
If you have a home equity loan and want to pay it off, then enter the loan balance of remaining principal here.
Personal Loan Balance ($)
If you have a personal loan, or even an outstanding student loan, then enter the outstanding balance on each loan here.
Mortgage Balance ($)
If you’d like to pay off your mortgage using your life insurance proceeds, then enter the amount of remaining principal on that mortgage here.
Assets and Savings:
In this final section of calculator inputs, you’ll be asked a series of questions concerning your existing assets and savings.
Employer Savings Plan ($)
This is the total value of money you have in an employer savings plan such as a 403b or 401k account.
Home Equity ($)
This is the equity you have in your home. Enter that amount if you are planning on selling your home or borrowing against its value.
Savings Accounts / Cash ($)
This includes cash, savings accounts with banks and other financial institutions, stocks, bonds, and personal IRA accounts.
Employer Life Insurance ($)
If you have life insurance coverage with your employer, then enter that amount here.
Other Life Insurance ($)
This is where you’d enter the amount of any existing life insurance you have; allowing this calculator to figure out if an insurance gap exists.
Total Basic Living Expenses ($ / Year)
This is the total of all the monthly basic living expenses entered earlier converted to an annual expense.
Total Basic Living Expenses ($)
This is the annual living expenses multiplied by the basic years of coverage entered earlier.
Total Significant Future Expenses ($)
This is the total of all the significant future expense you’d want covered by life insurance.
Total Outstanding Debt ($)
This is the total outstanding debt to be paid off using life insurance.
Total Expenses and Debt ($)
This is the total of all expenses and debt to be covered by life insurance or the assets mentioned earlier.
Total Assets ($)
This is the total of all assets you’ve identified earlier that could be used to either pay off existing debt or cover your monthly expenses.
Additional Life Insurance Needed ($)
This is the total amount of any additional life insurance you’d need to pay the expenses or financial obligations you’ve identified within this calculator.
Comprehensive Life Insurance Calculator
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.