# A Simple Life Insurance Calculator

## Life Insurance Calculator

This time we are offering a simple life insurance calculator, which can be used to estimate the total amount of insurance required based on the calculator’s five user supplied inputs:

• The person’s or household’s monthly living expenses
• The number of years of coverage needed
• Any large / one-time expenses in the future
• Outstanding debt to be paid off with the insurance proceeds
• The value of any liquid assets that could be used to pay for the monthly or one-time expense

The calculator then provides the user with one value:

• An estimate of the life insurance required to pay for the previously identified expenses

### Life insurance requirements and large, one-time expenses

Before anyone decides to buy life insurance, they need to take the time to be somewhat introspective. For example, if no one depends on you for financial support, it’s likely you don’t need life insurance unless there are special circumstances. You’ll also want to review how much financial support you provide each month. That includes both household expenses such as mortgages or rent payments, as well as utilities, groceries, clothing, and entertainment expenses. The monthly living expense value should also include items such as car or student loan payments. Annual expenses, like vacations, can be divided by 12 and added to the monthly expense line item.

There may also be one-time expenses you might want to include in this estimate. For example, paying for the share of a wedding, or the cost of someone’s college education. In this line item, you can also provide for the cost of your funeral.

### Outstanding debt, years of coverage and available assets

Instead of including loan payments in the monthly living expenses, you have the option of buying more insurance and paying off those loans. Once again, this can include car and student loans as well as a mortgage or credit card balances. The years of coverage value is used to determine how long you want to fund the monthly expense using the life insurance proceeds. For example, if your monthly expenses are 3,000 and you would like to be able to fund those expenses for 25 years, then the calculator will provide an estimate of 3,000 / month x 12 months / year x 25 years, or 900,000.

Finally, if you have liquid assets (bank account balances, retirement accounts and even shares of stock) that can be used to fund these expenses, the calculator will subtract those funds before providing the life insurance estimate.