How to calculate your life insurance needs

Have you ever wondered how much life insurance coverage you needed? Here are some questions that can help you calculate your needs.

Immediate Cash Needs

1)      Final Expenses (funeral, medical)                               $_____

2)      College Fund                                                                   $_____

3)      Emergency Fund (3 months expenses)                      $_____

4)      Child Care Costs                                                             $_____

5)      Mortgage Balance                                                        $_____

6)      Total Immediate (add up 1-5)                                     $_____

Ongoing Income Needs

7)      Current Annual household income                            $______

8)      Income objective (% above)                                        x______%

9)      Projected annual income need                                   =______

10)   Social Security Benefits                                                $______

11)   Survivors earned income                                             $______

12)   Survivors pension benefits                                           $______

13)   Other income                                                                 $______

14)   Total Income sources (add line 12-15)                      =______

15)   Annual income shortage (line 9 minus line 14)        $______

16)   Amount of capital required to provide this income

(line 15 divided by assumed interest rate 3%)        =______

Life Insurance Needs

Total life insurance needs (line 6 plus line 16)                        $______