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Assess Your Life Insurance Needs

Determining the amount of life insurance one needs can be frustrating, time consuming and exasperating. When you're alive and healthy, you may feel you are paying for too much life insurance. On the other hand, have you ever heard a widow or widower say they had carried too much life insurance on their departed spouse?

Below is a formula to help you in assessing your life insurance needs:

INCOME REPLACEMENT

Total annual household earned income: $
(ex. 50000)
Less annual earned income of surviving spouse after death of insured: $ ( )
Preliminary income shortage to family members: $
Less any unearned annual income to family:
(Such as trust funds, dividend income or financial help from parents)		 $ ( )
Total annual income shortage: $
Divide by assumed rate of return on investments:
(Remember your family will now live off the investment income so adjust your rate of return to fit their risk tolerance)		 %
(ex. 9 for 9%)
Amount needed for INCOME REPLACEMENT to family: $

CASH FUND NEED

Immediate cash needs:
(Bills that will have to be paid after death. Examples include; funeral/burial expenses, medical and hospital bills, attorney’s fees and estate taxes.)		 $

Mortgage:
(What would it take to pay off your mortgage today?)
OR
Rent payment fund:
(What amount is necessary to provide for five years of rent payments? Monthly rent $ X 60 months)

 $
Debt Liquidation:
(Total amount of current debt you wish to pay off)		 $
Children educational fund:
(Amount of money set aside specifically to provide for the college education of your children:
Annual college cost $ X number years of College X number of children )		 $

Child/Home care fund:
(A “rainy day fund” set aside to pay for the new expenses of child and/or home care created by the death of the spouse now performing these duties.)

 $
Any additional money you wish to provide (optional): $
Total CASH FUND NEEDS: $
Add Income Replacement and Cash Fund need for
TOTAL LIFE INSURANCE NEEDS:		 $
Less lump sum money available after death of spouse:
(such as IRA's, 401K's, employer sponsored group term insurance, and savings accounts)		 $ ( )

NEW LIFE INSURANCE NEEDED:

$

 

  
 


Life Insurance For Pilots
Portland, OR 97202
888.465.5228  |  Fax: 503.233.0084
jim@lifeinsuranceforpilots.com

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