All calculators are downloadable Excel spreadsheets that allow you to save and amend your own personal data.With this spreadsheet, enter your personal data in the purple coloured cells.
How much life insurance do I need calculator
This calculator allows you to see how much life insurance you may need based on your families needs.
You can enter your financial needs for:
Funeral costs
Paying off the mortgage
Paying off other debts
Children’s education
Other living costs that need covering from the loss of your income, such as insurances, food, rates, etc.
You can choose as few or as many of the reasons for needing life insurance from the above list as you like. A lot comes down to how confident you are in your partners income (if you have a partner) to continue. If you have kids, especially younger ones, deeply consider the impact on your surviving partner and their ability to earn an income. The loss of a partner will mean the remaining partner will need to spend more time and work on the family, which could impact the hours worked and income.
Some information about the calculator itself:
With this spreadsheet there may be a lot of empty purple cells. You don’t need to put inputs into them all. They are only there in case you need them.
It allows for a maximum of 6 kids
It assumes that if paying off the mortgage is part of your insurance needs, then the mortgage is paid off regardless of whether the property is kept or sold.
If there are any future expenses you want covered, such as living expenses for the years ahead or kids education, it assumes that the lump sum you receive from the insurance payout will match inflation. In other words, it assumes future spending needs are in todays dollars. You can typically achieve that by placing the money in bank savings.
It assumes any assets you list are to be sold in the event of your death. If you don’t want them sold, then don’t include it on the asset list.
The results of the calculator are only general in nature. As much as the calculator tries to capture your situation, there is nothing quite like independent advice. There are aspects of your life that a calculator can miss. The results here are only intended as information. A ball park figure of what you may need. That way when you go to an insurance broker or insurance company for information on life insurance policies, you are armed with information of your own. It’s a strong starting point to ensure you aren’t taken for a ride by your insurance company or broker trying to oversell your needs.
Finally, with life insurance, you want to review your needs every year or two. So many people keep the same pay out levels for decades, despite their financial situation improving over the years. Not only do finances improve as we age (mortgages get lower, savings get higher, etc), but it also means less future years that need living expenses covered for. As the years pass, there is a good chance that you don’t need to insure yourself for so much, thereby reducing the premiums you pay.
For personalised advice on any financial decisions you are considering, then get in touch for a no obligations chat to see how we may be able to add value for you.