While it is generally accepted that we all need life insurance, especially when we carry considerable responsibilities, such as while we are paying off a mortgage and raising a family, it is not often so clear regarding exactly how we should calculate the amount of cover we actually require. Many life insurance companies will generally load you up with more than you actually need in order to glean a larger premium from you. Others might leave it up to you, especially in this day and age where a lot of life insurance purchasing is made via the internet. Therefore if you’re buying online or you’re wondering how to balance what you need with what you can afford, it becomes important that you avail yourself of a life insurance calculator.

Income Protection Insurance Calculators

A life insurance calculator is not as complicated as you might first think, it is basically common sense, but if you are not fully conversant with life insurance matters, there may be items on a life insurance calculation that you might miss, therefore, a professionally prepared life insurance calculation can be of great advantage to you.

Another factor in using such a device is that your life insurance needs continually change throughout your life. For instance, while young and still single all you will really need is enough cover to pay any debts you might otherwise leave as a burden for someone else to have to carry as well as the cost of your funeral.

Things change however when you marry, buy a house and start a family. At this stage of your life, while you have dependants, you carry a considerable responsibility to ensure that if something should happen to you, the family that you have put together could continue to live to their accepted standard of living, and their plans for the future could still be carried out. This can mean quite a large life insurance cover is required.

As the family grows, leaves home and the mortgage is finally paid off, you have fewer responsibilities once again, and all you need at this stage is enough money to pay any outstanding debts you may have including your funeral costs. These are the types of matters that will concern you as you plan your life insurance and this is where a life insurance calculator can come in handy.

The Life Insurance Calculator

A life insurance calculator, such as the one outlined here, is a ‘rule of thumb’ guide to have you thinking about the right things, a financial, or life insurance advisor is of course a better source to get more professional advice, especially when it comes to the type of life insurance you will need at different stages of your life. In order to calculate the level of life insurance you will need at any stage of your life, consider your calculations of the following factors in your life:

• Existing Debt. Write down the full amounts owing on all your current, existing debts. Not what you pay off the debt each month but the total amount owed plus interest. As an example, you might owe $400,000 on your mortgage, $25,000 on your car, $10,000 on your credit card and so on.
• Future Debt. Future debt covers things like your funeral expenses. Don’t fall into the trap of thinking this is a small expense as it is not any more. Funerals can become quite expensive and the costs are not getting any smaller. Plus, future expenses will also include the education expenses for your children. It is only natural that you will want your children to obtain the highest level of education they are capable of reaching. This might mean them having to move to a residence closer to their college or university as they reach that stage, let alone the costs associated with higher education itself.
• Maintaining Your Family’s Standard of Living. In order to find a cost relating to your family’s standard of living you will need to work out how much it costs you for food, clothing, rent if you are not buying your own home, entertainment, replacement of household items, transport, anything and everything you actually pay each month, multiply that figure by 12 to get an annual cost, allow for inflation and multiply your yearly cost by however long it will take your youngest child to reach 18.

Once you have done all this you can subtract any present life insurance cover you currently enjoy and at this stage you will have calculated your life insurance needs.

Keeping Your Premiums Costs Low

In order to get the lowest premiums on your life insurance you will need to be in the best of physical health, it is best if you are not overweight and live a healthy lifestyle. Your age too will be a factor but that is one variable that none of us can change. Many insurers will offer a lower premium if you don’t smoke. By working on your life insurance calculator you will ascertain how much life insurance you need, it is then up to you to keep yourself healthy so you can take advantage of a lower premium.