When purchasing life insurance, the question really isn’t how much you need, but how much capital your family will need at the time of your death, which depends on two variables:
- Expenses. How much will be needed at death to meet immediate obligations? This amount takes into account all final expenses: uncovered medical bills, funeral and estate-settling costs, outstanding debts, mortgage balance, and college costs to name a few.
- Income. How much future income is needed to sustain the household? This is the number you’ll arrive at after calculating the “present value” of cash-flow streams your family will need after your death.
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Sample Questions and results:
Estimate your family’s expenses that could be funded or paid off by life insurance in the case of your death:
Estimate your family’s expenses that could be funded or paid off by life insurance in the case of your death:
Estimate your family’s recurring income needs if you died today:
Estimate your family’s sources of income:
Review and adjust the typical settings before calculating your results:
Your need for life insurance:
Should you die, the financial impact on your dependents is the loss of your income as well as the immediate expenses associated with your death. The death benefit offered through life insurance serves as replacement income for a period of time to help your family build a more financially secure future.
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