One of the hardest things to imagine is how much money your family would need if you were no longer here. People that work have an estimation based on what they earn but anyone that stays home knows while the job description is amazing the pay is in kisses and hugs not dollars. Makes it tough to crunch numbers.
There are a million formulas for calculating how much insurance you need. At the end of this article you will find links to several different websites you can check out all that have free life insurance calculators. Before you start plugging in numbers there is a fairly easy and basic formula that will help you. The formula below is taken from a Free Life Insurance Needs Analysis you can have done for you by O’Connor Insurance. The analysis is designed to help you answer these questions:
It is a great analysis and it breaks the information into easy to digest segments.
The Life Insurance Calculator is designed to start a conversation with your spouse and it is a great place to start number crunching. The section below gives a full explanation for each of the fields you will find on the worksheet. You can download the Free Life Insurance Calculator Worksheet here.
Life Insurance Calculator Worksheet Explanation
Would you like your mortgage paid off?
Would you like any other debt you have (car loans, credit cards, student loans) paid off?
Would you like to set aside the money for your child(rens) college education?
List the amount you estimate a funeral and final expenses will cost (this is easily $12,000 on the inexpensive side up to realistically $20,000 – $25,000)
Any other financial needs you would like money put aside for? This could be a charity or another family member etc…
If all of these items were paid for would your spouse need money to supplement the remaining monthly expenses like utilities, clothing, insurance etc… This could also be for child care for a working parent. This is generally referred to as income replacement.
Subtract from the total above the amount of life insurance you have that you own. If you have a policy through your employer only subtract it if it is “portable” meaning you can take it with you if you leave your job.
Immediate Life Insurance Needed – this is the amount of life insurance you need right now
This is a great way to logically think through what can be a very big task of estimating how much money would be needed. It is a good way to start the conversation. You can learn more about the life insurance service O’Connor Insurance offers by checking out our Life Concierge page.
If you still want to plug numbers into a website please check out any of the ones listed below:
Give O’Connor Insurance a call today at 704-510-8884 to set up your free absolutely no obligation Life Needs Analysis.