LIFE INSURANCE CALCULATOR EXPLANATION

* Use this calculator to calculate life insurance and critical illness coverage amounts.


To protect your future income against death, you purchase life insurance. You must purchase an amount of life insurance that will provide your family with enough tax-freemoney which, when invested, will provide enough income to replace the economic loss of your future income.


Note: When calculating this amount, you must ALSO take inflation into account. The calculator will assist with this.


If you (as the breadwinner) personally consume 20% of your income today, your family will need 80% of the present value of your future income.


Remember, both earned income and investment income are taxed. Your family should invest this amount conservatively, therefore both types of income are taxed at similar rates. The amount of money required will be based on your GROSS income before tax.

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Should a breadwinner die, the financial impact for dependents is the loss of the breadwinners income. The following will calculate the money needed for a replacement income.

Gross Annual Income of Breadwinner (before tax)

Perentage of income required by Dependents %

Replacement Income required if Beadwinner dies 48000

Other Income (government/group income benefits)

Net replacement income required by dependents 43000

Age of Breadwinner

Number of years this income will be required

For the next 25 years, estimate the inflation rate %

For the next 25 years, estimate the interest rate %