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Life Insurance Needs Calculator

By JLP | May 29, 2006

I put this Life Insurance Needs Calculator together this weekend as a BEGINNING POINT for those who are evaluating their life insurance. The purpose of the calculator is to give you an idea of how much life insurance you need so that you can have an intelligent conversation with your insurance broker when you go shopping for insurance.

If you are going to buy insurance from a broker, I would recommend an independent agent because they are usually not obligated to sell one brand of insurance over another. However, that’s not always the case so it is a good idea to ask them which companies they represent. If you don’t like the answer, then go somewhere else or consider purchasing online through Insure.com or some other insurance website.

Remember that price isn’t everything. In other words, DON’T SIMPLY BUY THE CHEAPEST insurance. Company reputation should be more important than rates.

Topics: Financial Planning, Insurance | 8 Comments »


8 Responses to “Life Insurance Needs Calculator”

  1. Denise Says:
    May 30th, 2006 at 9:19 am

    Your life insurance needs calculator is a really great starting point for people. It’s a shame…a lot of agents simply don’t take the time to analyze people’s needs. Instead, they take the easy way out and provide a guideline of 5-10 times your income.

  2. Christopher, Says:
    May 30th, 2006 at 4:05 pm

    I agree with Denise that your needs calculator is a good starting point for people. As you stated, it is important to buy quality insurance that will meet realistic needs instead of purchasing the cheapest. A consumer often won’t know their needs without speaking to a qualified agent who can help them do the right needs analysis. I work for MostChoice.com, a company that helps customers looking for life insurance find these agents (as we have a national independent agent base). We believe there is a value in consumers speaking to a few agents that represent different reputable carriers so they can make an informed decision.

    Christopher from the MostChoice team.

  3. » Weekly Blog Round-Up » Consumerism Commentary: A Blog About Personal Finance Says:
    June 2nd, 2006 at 1:37 pm

    [...] JLP from AllFinancialMatters adds the life insurance needs calculator to his growing list of financial calculators. [...]

  4. Larry Says:
    August 8th, 2006 at 12:33 pm

    To ensure full disclosure, I’m a New York Life Financial Services Professional.

    Your calculator is actually very strong, keeps things simple, and includes a lot of important concerns. However, I have an even simpler way to calculate the MAXIMUM amount you should purchase.

    Take your annual income, multiply by the estimated remaining work years and then multiply by (1 minus your (actual Fed/State/Local tax rate + 7.5% for SSN)). An easy example is a 30 year old making $70,000 and paying $7,000 in annual taxes. ($70,000 * 35 [assuming retirement at 65] * (1-.l75)) = (2,450,000 * .825) = $2mm

    This is effectively, the expected “take home” pay over the individual’s economic life. It’s not exact, but it is quick to calculate and VERY easy to understand.

    Unfortunately, I have too many prospects who don’t want to go through a calculation for many different reasons. So, I’ve found this as an effective method.

  5. Term Life Online Says:
    February 26th, 2008 at 2:16 pm

    I agree with you regarding company reputation being more important than rates. But, customer service and any complaints filed with the Dept. of Insurance should be considered as well.

  6. Life Insurance India Says:
    August 8th, 2008 at 2:36 am

    thanks for the gr8 calculator, would certainly incorporate in my website

  7. Atiq Says:
    December 24th, 2008 at 3:30 am

    There is a lot of common points to recognise when you’re thinking of life insurance. When you’re trying to understand condition life insurance, you would like to be sure that you realize the basic principle of however these type of life insurance works. That way, you are able to be perfectly sure that you’ve decided the correct case of life insurance for you.
    Also find the best quotes in the UK for life insurance and critical illness cover. We have years of experience and a wealth of adive available. Get a quote online today.
    http://www.jumplifeinsurance.co.uk

  8. UK Insurance Guide Says:
    February 23rd, 2009 at 7:57 am

    This is a great tool to assist individuals to calculate what their insurance needs are. As you rightly point out this is a starting point providing you with a rough figure as to how much cover you could have. You are additionally right to point out that price is not everything. If you think about it what use is the cheapest cover if they are totally inefficient at handling your claim or indeed the worse case senario, that they do not pay it at all!

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