How much life insurance do you need?

How much life insurance do you need? Enter your current assets, expenses, income and let us determine how much life insurance you need. You can also adjust the inflation rate and your expected rate of return to see how these variables can impact your insurance needs. Press the report button to see a year by year breakdown of your family's future income and expenses.

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Definitions

Inflation rate
This is the rate that you expect your expenses to rise. Your total expenses are increased by this rate for each year you require income. The income you would receive from your life insurance policy is used to cover any shortfalls between your expected income from all sources and your expenses.

Income tax
This is your income tax rate. Changing this rate only affects your interest income from your investments. All other income and expenses should be entered on an after tax basis.

Cash and savings
Total you have in cash, checking accounts, savings accounts or other accounts that can be used to help cover expenses.

Home equity
Total amount of equity in your home that you are willing to use toward your living expenses. Only include the home equity that you consider available to use toward your living expenses. For example, the equity you would make available by selling your home and moving into a smaller one.

Investments
Total value of all investments that you are willing to use toward your living expenses.

Other
Any other assets that you may be willing to sell or liquidate.

Estate or inheritance taxes on assets
Taxes that are required to be paid on your assets at death.

Probate costs
Probate costs cover a state's legal fees for disbursing the assets of the deceased. You may incur significant probate costs, depending on your state of residence, even if you have a will.

Funeral costs
All costs required to cover the cost of the funeral.

Uninsured medical costs
Any medical costs that are not covered by your medical insurance. Make sure to include any deductibles.

Debt repayment
Credit card debt, auto loans, home equity loans, mortgages or other debt that you wish to repay. Providing the ability to repay these loans if you were to die can significantly help your family meet its monthly living expenses.

College fund for children
Amounts you wish to provide your surviving children to cover future college expenses.

Spouse income from work
Income expected from your spouse after your death. If your spouse needs education or retraining, make sure that the starting year for this income provides adequate time to complete.

Social security survivor benefits
Depending on your work history, your family may qualify for social security benefits.

Living expenses with children at home
Total monthly expenses while your children are living at home. This should include all monthly expenses except child care.

Living expenses with children gone
Total monthly expenses after your children have left home. This should include all monthly expenses.

Children's education expenses
Monthly expenses for your children's education expenses. If your children have not yet entered college, and have no other educational expenses, leave this amount at zero and enter an amount in the college fund entry fields in the total expenses at death section.

Retraining and education for spouse
Monthly expenses expected to cover any cost of education or retraining for your spouse to re-enter the workforce.

Other expenses
Any other monthly expenses not included above.

Savings balance
The amount of funds available to your family after your expenses at death have been covered. This includes any current life insurance.

Return on investments
The annual rate of return expected from your investments, including any life insurance payments. The actual rate of return is largely dependant on the type of investments you select. For example, from January 1970 to February 2003 the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11%. Savings accounts at a bank pay as little as 2% or less.  It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volitility.  The actual rate of return on investments can vary widely over time, especially for long-term investments.  This includes the potential loss of principal on your investment.