Insurance Calculator Definitions
Current life
insurance coverage
Total amount of life insurance coverage
you currently have for yourself.
Years for insurance income to last
Number of
years your spouse will need to use your
insurance proceeds to provide for living
expenses and income.
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Inflation rate
-
What you expect for the average long-term
inflation rate. Your total expenses are
increased by this rate for each year you
require income. The income you would receive
from your life insurance policy is used to
cover any shortfalls between your expected
income from all sources and your expenses.
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Return
on investments
-
This is the annual rate of return you expect
from your investments. The actual rate of
return is largely dependant on the type of
investments you select. The assumed rates of
return do not predict the results of any
particular investments. It is important to
remember that future rates of return can't
be predicted with certainty and that
investments that pay higher rates of return
are subject to higher risk and volatility.
The actual rate of return on investments can
vary widely over time, especially for
long-term investments. This includes the
potential loss of principal on your
investment.
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Income
tax
-
This is your income tax rate. Changing this
rate only affects your interest income from
your investments. All other income and
expenses should be entered on an after tax
basis.
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Cash
and savings
-
Total you have in cash, checking accounts,
savings accounts or other accounts that can
be used to help cover expenses.
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Home
equity
-
Total amount of equity in your home that you
are willing to use toward your living
expenses. Only include the home equity that
you consider available to use toward your
living expenses. For example, the equity you
would make available by selling your home
and moving into a smaller one.
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Investments
-
Total value of all investments that you are
willing to use toward your living expenses.
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Other
-
Any other assets that you may be willing to
sell or liquidate.
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Estate
or inheritance taxes on assets
-
Taxes that are required to be paid on your
assets at death.
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Probate
costs
-
Probate costs cover a state's legal fees for
disbursing the assets of the deceased. You
may incur significant probate costs,
depending on your state of residence, even
if you have a will.
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Funeral costs
-
All costs required to cover the cost of the
funeral.
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Uninsured medical costs
-
Any medical costs that are not covered by
your medical insurance. Make sure to include
any deductibles.
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Debt
repayment
-
Credit card debt, auto loans, home equity
loans, mortgages or other debt that you wish
to repay. Providing the ability to repay
these loans if you were to die can
significantly help your family meet its
monthly living expenses.
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Other
expenses
-
Any other items that you need to pay with
your insurance proceeds.
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College fund for children
-
Amounts you wish to provide your surviving
children to cover future college expenses.
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Spouse
income from work
-
Income expected from your spouse after your
death. If your spouse needs education or
retraining, make sure that the starting year
for this income provides adequate time to
complete.
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Social
security survivor benefits
-
Depending on your work history, your family
may qualify for Social Security benefits.
Typically Social Security benefits for the
Widow/Widower cease when the youngest child
turns 16. The child's benefit generally
continues to age 18. Once the children are
gone, Social Security benefits are generally
not available until the Widow/Widower turns
age 60.
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Living
expenses with children at home
-
Total monthly expenses while your children
are living at home. This should include all
monthly expenses except child care.
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Living
expenses with children gone
-
Total monthly expenses after your children
have left home. This should include all
monthly expenses.
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Children's education expenses
-
Monthly expenses for your children's
education expenses. If your children have
not yet entered college, and have no other
educational expenses, leave this amount at
zero and enter an amount in the college fund
entry fields in the total expenses at death
section.
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Retraining and education for spouse
-
Monthly expenses expected to cover any cost
of education or retraining for your spouse
to re-enter the workforce.
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Other
expenses
-
Any other monthly expenses not included
above.
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Savings balance
-
The amount of funds available to your family
after your expenses at death have been
covered. This includes any current life
insurance.
