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How Much Life Insurance Do You Need?
Here's a quick worksheet to help you get 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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