Life Insurance Needs Assessment Worksheet
Here are some useful
formulas and process used to determine your approximate life insurance
needs:
Two methods are commonly used to determine your life insurance
needs: the Expense Needs formula and the Income Replacement
formula. You should try both and compare the results.
Feel free to print this worksheet and use it to
calculate your approximate life insurance needs.
The Expense Needs Formula
The Expense Needs formula itemizes your family
needs to determine how much insurance is necessary.
First, consider the
following items, enter a value for your situation and calculate
the total:
| Expense Category |
Guidelines |
Your Need |
| Funeral Expenses |
Usually $5-15k |
____________________ |
| Legal Fees |
Set by court |
____________________ |
| Estate & Gift Taxes |
A % on estates over $600,000 |
____________________ |
| Business Buy-out |
Your percentage of business |
____________________ |
| Probate Fees |
Authorized by probate courts |
____________________ |
| Medical Deductible |
Consider your deductible ceilings |
____________________ |
| Emergency Fund |
6-9 months expenses |
____________________ |
| Mortgage Expense |
Mortgage balance |
____________________ |
| Rent |
Rent for 10 years |
____________________ |
| Debts & Loans |
Enough to pay all debts |
____________________ |
| College |
Total projected college costs |
____________________ |
| Child Care |
Total from infant until school |
____________________ |
| Private Schooling |
Costs until college |
____________________ |
| Maintenance |
Cleaning and repairs for 10 years |
____________________ |
Total:
|
____________________ |
Next, calculate your assets:
| Asset Category |
Value |
| Bank and Savings Accounts |
____________________ |
| Surviving Spouse Projected
Income |
____________________ |
| Social Security Survivorship
Benefit |
____________________ |
| Current Life Insurance |
____________________ |
| Other Assets |
____________________ |
Total:
|
____________________ |
Then calculate your approximate coverage needs:
| |
Amount |
| Total Expenses (from above) |
____________________ |
| Minus . . . Total Assets (from above) |
____________________ |
Approximate
Additional Life Insurance Required:
|
____________________ |
The Income Replacement
Formula
The Income Replacement Formula is based on your annual income
and is used if you’re still working. There are a couple of
different versions of this method.
First, if you’re
already retired, include your pension if it ends at your death.
Simply multiply
your annual income by how many years you want your family supported
(usually
until you retire).
It would look like this:
| |
Amount |
| Annual Income |
|
____________________ |
| Number of years until retirement |
X |
____________________ |
Approximate
Additional Life Insurance Required:
|
____________________ |
Another income replacement method is to multiply your annual
income times 10. It would look like this:
| |
Amount |
| Annual Income |
|
____________________ |
| Number of years until retirement |
X
|
10 |
Approximate
Additional Life Insurance Required:
|
____________________ |
One last income replacement method
is to multiply your annual income times 5, and also add in
the balance of your mortgage. It would look like this:
| |
Amount |
| Annual Income |
|
____________________ |
| Number of years until retirement |
X |
5 |
| Balance owed on your mortgage |
+
|
____________________ |
Approximate
Additional Life Insurance Required:
|
____________________ |
To get more information about any of our products,
send us an email at info@benefitsphere.com,
or call us at 1-877-891-6162.
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