Using a Life Insurance Calculator
Every living person is unique, and so is life insurance. A life insurance calculator will analyze your input and come up with a figure that makes some sense. You will still need to factor these things into any future decisions:
– Your weight
– Your medical condition
– Your family’s history
– Your annual income
– Your family’s projected living expenses
– Your current debt
Considering Life Insurance?
It may not be something you want to think about. It's easy to believe that you will live forever, but if you care about your family's well-being, you've got to prepare for the worst. Tragedies happen, and just in case the unthinkable should occur, your loved ones deserve financial protection.
Are you married? Do you have a family? Maybe you own your own business or care for an elderly parent. If any of these things are true, then it's time to face reality: You need to think about getting some quotes for life insurance.
What Kind of Policy is Best?
Life insurance is not a one-size-fits-all proposition. Your ideal policy will depend on your life situation. In general, though, a good policy will:
- Cover your medical expenses.
- Pay your funeral and burial costs.
- Deal with your estate taxes.
- Support your loved ones.
- Help with ongoing bills and expenses.
- Cover your children's day care costs or college tuition.
- Supplement your spouse's retirement.
- Protect the interests of your business.
What is Term Life Insurance?
Of the available insurance options, this can be the least expensive. The period of coverage is limited. If you die during the term, your beneficiaries will receive your death benefit. If you outlive your policy, you will need to purchase a new one.
What is Whole Life Insurance?
In addition to providing permanent life insurance, whole life insurance is more of a financial instrument, offering cash value accumulation, living benefits, tax advantages and various guarantees and waivers.
What is Premium Life Insurance?
If you like the idea of potentially getting cash back, premium life insurance could be the choice for you. This is a case where it helps to live a long life. After making regular payments for a predetermined number of years, you should receive back the amount that you have already paid in. If you should die before that time, your beneficiaries will still receive the death benefit.
What Does Life Insurance Cost?
Life insurance rates will vary. If you smoke or have a chronic medical condition, then face it: You're going to pay more. On average, though, you can have term life insurance starting as low as $10 a month. The whole life variety will range from a low of about $24 a month to a high of $80 or more, but that amount will never increase. Premium, the most expensive type, can cost as much as 30 percent more than the others.
How Much Life Insurance is Appropriate?
Most experts feel that your benefit should equal between seven and 10 times your yearly income, but the exact amount you need can be higher or lower than that. A policy worth $1,000,000 may sound as if it would be sufficient, but it will only provide your family with an annual income of $50,000 for 20 years. Will that be enough? Are you sure?
When making your calculations, don't forget to consider unavoidable expenses. These include your projected funeral costs, the amount of debt you currently carry and any potential estate taxes. Some things to think about are:
The cost of the funeral: While these start at about $7,000 for a no-frills affair, the tab can easily rise to well over $20,000 in some locations. While nearly all mortuaries offer package deals, they could wind up costing more than if you broke it down piece by piece. To be certain that you're getting the deal you want and one that your family can afford, it might not hurt to plan your funeral ahead of time.
Probate fees: These can amount to between 2 and 7 percent of an estate's value. The good news is that smaller estates are exempt from probate fees. Depending on where you live, if you're worth less than $50,000 to $100,000, your estate might escape these fees entirely.
Legal and executor's fees: These will also vary from region to region.
When You're Good to Go
You've read the reviews, gotten your quotes and purchased your life insurance. Now, it's time to relax. The peace of mind that will come from knowing your loved ones will be able to survive without you with no change in their living conditions can be priceless. Life insurance can erase those worries from your mind, allowing you to live your life the way you want.