Life Insurance Calculator  


Life Insurance Calculator

Perhaps the biggest mistake made by life insurance shoppers is not calculating the necessary insurance amount. For example, $125,000 sounds like a lot of money. But, when you realize that the insurance amount needs to provide income for many years if your life ends unexpectedly, $125,000 will not go very far. That's because the life insurance amount must be used to fund an investment, which then provides the replacement for your income.

For example, if your life insurance pays out $127,953 to your dependents, who need protection for the next years, and they invest it at a return of , with annual inflation, they will receive in annual replacement income. Can your dependents live on that annual income? If not, then you should use our life insurance calculator to figure out how much insurance is required to replace your current income.

How does the calculator work? It assumes that your dependents will spread out their usage of the proceeds for the time period they need it, in our example 10 years. They will invest the proceeds in a safe investment, in our example one that returns 6%. But, they won't realize the full 6% because money in the future is not worth what it is today due to inflation, in our example 3%. Then, it calculates how much is needed to replace the desired income, in our example $15,000 per year.

To check our example, click the button and you will see that you need $ to replace the income. Put in your own numbers and see how much life insurance you need to replace your income.

The good news is that term life insurance has become very affordable over the past few years, and the price war is still being waged. Once you have calculated your insurance amount, then use our cost estimator to find out how affordable term life insurance has become. Good luck!








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