Comprehensive Life Insurance Analysis
How much life insurance do you need? This comprehensive life insurance calculator includes detailed net worth analysis, budgeting and college savings to help you decide how much life insurance you might need. You can also adjust the inflation rate and your expected rate of return to see how these variables can impact your insurance needs. Click the "View Report" button for detailed results.
Calculator Definitions
Years for insurance income to lastNumber of years your spouse will need to use your insurance proceeds to provide for living expenses and income.
Existing life insuranceTotal amount of life insurance coverage you currently have for yourself.
Inflation rateThis is the rate that you expect your expenses and income to rise. Your total expenses and earned income are increased by this rate for each year you require income.
Return on investments (after tax) The annual percentage rate you expect to earn on your savings. This includes any insurance proceeds and your educational savings. You may wish to use a more conservative rate of return if you will need to begin using your insurance proceeds immediately. The actual rate of return is largely dependent on the type of investments you select. For example, from December 2000 to December 2010, the annual compounded rate of return for the S&P 500 was 0.899%, including reinvestment of dividends. From January 1970 to December 2010, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.05% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge. This calculator compounds all growth annually. For the purposes of this calculator taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains you should enter your after tax rate of return
Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment.
Home Current value of your home. This should be as close as possible to the actual market value of your home. If you have owned your home for a number of years, the current market value could be significantly higher than your original purchase price.
Other real-estate The value of any other real-estate you may own. Include second homes, undeveloped land, rental property or any commercial buildings you may have an interest in. As with your home, use the actual market value of this real-estate.
AutomobilesThis is the total value of all automobiles that you own. Do not include any leased vehicles.
Other vehiclesIf you own any other vehicles, such as RVs, campers or collectibles, enter them here.
JewelryThe value of any jewelry, gems or precious metals such as gold. If you have owned these items for a number of years they may have appreciated in price, remember to use the current market value.
Other personal propertyThe value of other assets. This might include items such as furniture, home electronics, silverware, etc.
Registered retirement accountsThe current total balance of your registered retirement accounts. This would include RRSPs (term deposits, mutual funds), RRIFs, Employer Pension Plans, annuities and any other registered retirement savings you may have.
BondsIf you own any Treasury, municipal, or commercial bonds enter the total here.
StocksIf you own any individual stocks, enter the total here. Again, do not include any stocks that are held in a registered retirement account.
Mutual fundsIf you own any mutual funds, enter the total here. Do not include any mutual funds that are in your registered retirement accounts, they were already included in the "Registered retirement accounts" line.
Checking and savingsThe current total balance of your checking and savings accounts.
Living expensesCurrent estimated cost of one year living expenses. Like tuition and books, this amount should be per child and specific to the school they may be interested in attending. For the purposes of this calculator all expenses are assumed to be due at the end of the year.
Monthly living expensesThis is the total of all of your monthly expenses. Click on the button "Living Expenses Calculator" to enter your monthly expenses. This includes your expenses for housing, insurance, loan payments, utilities, and other miscellaneous items.
Surviving spouse's monthly income Input your income from your paycheck. Click on the button "Income Calculator" to enter the details of your surviving spouse's paycheck and any deductions.