Life Insurance Calculator

One of the best investments a person can make is life insurance.  This safe, affordable, and risk free option can put an entire family’s mind at ease.  A common misconception is that many people believe they have sufficient life insurance in place.  In truth, if people were to use a life insurance calculator found online or to talk to a life insurance agent, they would be shocked to find they are way under covered.

If you are considered the primary breadwinner of the home, then you already know how much stress is involved in caring for those you love.  Unfortunately, illness, accidents, and ultimately death are things that happen every day.  While this is an uncomfortable subject for many people to broach, it is one of the most important.  The number one goal is making sure you have enough life insurance to care for your family long after your passing.

Typically, you want to consider an amount of life insurance that would allow your loved ones to continue living in the current lifestyle.  This does not necessarily mean millions of dollars, but again, you can work with a professional or check out any number of online life insurance calculators to determine the right amount.  From there, you and your family can enjoy life, resting in the fact that after death, those left behind will be fine from a financial point of view, not to mention the reduction of stress.

In most cases, life insurance is based on a number of factors to include the price, age of the individual buying the policy, current health condition, and even type of job or activities involved.  The recommendation is usually 10 times that of your annual income.  In other words, if you made $50,000, then you would want to consider a life insurance policy for $500,000.  Of course, if your spouse does not work, there is an existing illness with a loved one left behind, or perhaps small children in the home, you can always consider buying more.

It is important to understand that a life insurance policy can be taken out not only on the head of the household, but anyone within the family.  This means a spouse, children, etc.  To get started, talk to an insurance professional or financial advisor to gain a better understanding as to the type of life insurance but also the amount of the policy.  In the meantime, you can conduct a search through any online search engine, looking for a life insurance calculator.  With this, you simply provide some basic information and in return, you are provided with a good estimate as to what you actually need.

Now, if you are self-employed, you probably want to look at life insurance within superannuation.  In this case, all of the premiums of the policy are tax deductible.  This will help you save money in that the policy is separate.  In addition, for self-employed individuals, this option allows tax deductions on contributions, no matter if they are for insurance or investment purchases.  In cases of having a young family, this is an ideal solution, providing you with financial protection and security by saving money on the deductions, as well as rebates.

The bottom line is that buying any type of life insurance can be a little overwhelming.  After all, there are many dynamics that come into play.  One of the greatest challenges is getting past the terminology.  For this reason, we suggest that you take time to study life insurance to some degree, learning what the various terms mean.  This way, the buying process is much less intimidating and you end up with the type and level of coverage you need.  To help you get started, we have provided some of the basic terms you might come across.

Attained and Nearest Age – In some cases, your attained age would be used to determine the age specific to the calculations used for term life.  This means taking your current age to come up with the right answers.  For nearest age, the policy would be determined based on a rounded number opposed to actual age.

• Beneficiary – The beneficiary of any life insurance is the individual or individuals who would receive the benefits after your death.  Most often, the policy buyer would make a spouse and/or children the beneficiary but in some cases where there is no family, a charitable organization could be named.
• Coverage Amount – Also referred to as “face value”, this is the actual amount of the policy.  In other words, if you were to purchase a policy worth $500,000, this would be considered the coverage amount.  The only thing this does not include is any outstanding or late payments due on the policy, dividends, withdrawals, loans against the policy, or paid up additions.
• Premium – This refers to the dollar amount paid for the life insurance policy
• Proposed Insured – This is the person who completes the application for the life insurance policy.
• Underwriting Guidelines – To decide how the policy would be classified, an underwriter reviews a number of factors based on underwriting guidelines set forth by the government and insurance company.  For instance, some of the various factors that would be used include your lifestyle, health, age, gender, height and weight, history within the family for heart disease, cancer, high blood pressure, etc, driving record, occupation, criminal records, and so on.