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Life Insurance Needs Analysis

A tool to estimate the right amount of life insurance coverage for your family. Complete each section below and your recommended coverage amount will calculate automatically.

Section A Immediate Cash Needs
Line 1 Final Expenses Covers funeral costs, medical expenses, probate fees, and other end-of-life costs. Average funeral expenses are about $10,000.
$
Line 2 Mortgage Balance Enter your current mortgage balance if you want the policy to pay it off upon your death.
$
Line 3 Other Debts Credit card balances, car loans, personal loans, and any other outstanding liabilities.
$
Line 4 Emergency Fund Reserve for unforeseen needs after your death: income loss, medical expenses, home or auto repairs.
$
Line 5 Education Fund Total cost to send your children to college. Average annual cost: public $13,000 / private $28,000 per year.
$
Line 6  Total Cash for Immediate Needs (Lines 1-5)
$80,000
Section B Future Income Needs
Line 7 Survivor's Annual Income Need Enter your current annual income (or the annual amount your family would need to maintain their lifestyle). For example, if you earn $50,000 per year, enter $50,000. Line 8 (the Money Factor) will convert this to the lump sum needed today.
$
Line 8 Money Factor Select from the Money Factor Chart below. Based on years of income needed and your expected real rate of return (investment return minus inflation).
Line 9 Present Value of Future Income Needs Line 7 (annual income) times Line 8 (Money Factor). This is the lump sum your policy needs to deliver today to replace your income over the selected time period.
$
Income Needed1%2%3%4%5%6%7%8%9%

How to use this chart:  Determine how many years your family will need income replacement. Subtract the expected inflation rate (1-5%) from your expected savings or investment return (6-10%) to get your Real Rate of Return. Find that intersection and use that number as your Money Factor for Line 8.

Section C Available Funds
Line 10 Savings & Investments Current value of savings and investments that could provide family cash flow upon your death. Include stocks, bonds, and savings accounts.
$
Line 11 Retirement Savings Current value of retirement accounts (IRA, 401k, 403b, annuities) that could be liquidated to provide family cash flow.
$
Line 12 Other Assets All other assets that may provide income: inheritances, commodities, rental properties, etc.
$
Line 13 Current Life Insurance Total face value of all existing life insurance policies, including any group coverage through an employer.
$
Line 14  Total Available Funds (Lines 10-13)
$1,720,000

Needs Summary

Line 15 — Total Funds Needed at Death (Line 6 + Line 9) $3,605,000
Line 16 — Total Available Funds (Line 14) $1,720,000
Line 17 — Estimated Additional Life Insurance Coverage Needed
(Line 15 minus Line 16)
$1,885,000
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This tool is for educational purposes only. It does not constitute financial or insurance advice. Actual coverage needs vary based on individual circumstances. Mike Pair is a licensed insurance agent in the state of Georgia. Contact a licensed professional before purchasing any insurance product.

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