Factors Necessary for a Life Insurance Calculator
A life insurance calculator can be an essential guide in determining how much life insurance to purchase in order to cover your family’s expenses in the event of your death. There are many aspects that play a part in the life insurance calculator. So it’s important to come prepared with the following.
Resource to Meet Your Needs
Those looking for a general idea about life insurance, life insurance quotes or those seeking to find if lifestyle changes would impact life insurance can often use a life insurance calculator. It should not be used to purchase a policy, but as a general guideline about how much and what type of policy to purchase. It is a great resource for those who are getting married, buying a home, having a baby, changing jobs, dealing with debt, planning for college, looking for a savings plan or planning to retire.
Variables to Know
When using any life insurance calculator, you will need to determine how much money your family will need at the time of your death. This relates to funeral expenses, medical bills and other immediate costs that your family will take over upon your death. You will also need to know how much money your family would need to sustain life and cover regular expenses, such as bills, food and house or rent payments.
Annual Income Needed for Your Family
The first part of a life insurance calculator determines how much total income your family will need for a span of time. Figure out how many years your family would need financial help following your death. Factor in any current savings or investments you may have in place already. You will also need to provide your total annual income.
Another step in the life insurance calculator is questions related to your spouse’s income, should he or she work following your death. You will need to provide your spouse’s annual income and the number of years your spouse anticipates to work.
When completing a life insurance calculator, it may ask questions related to inflation or taxes. These will help insure that you are getting a policy that is relevant at the time of your death.
Options for Life Insurance
Once you’ve completed a life insurance calculator, you will be provided with various options to meet your needs. Generally, life insurance falls into two categories and the life insurance calculator will fit you into one of the categories. Term insurance is the most affordable type of life insurance and covers a designated period of life. It only pays the benefit if you die during the designated term. Permanent life insurance provides a lifetime protection and the full amount will be paid to your family upon your death. It also accumulates a cash value.