If you’re looking for insurance that’s designed to protect your family in the event of your passing, life insurance is the obvious answer. It was originally conceived to address this specific issue and does the job very well. The only problem you might have when shopping for a suitable policy is working out how much coverage you need, but there’s a handy solution to this issue, as we’re about to discover.
Life Insurance Calculators: A Very Modern Solution to an Age-Old Problem
Unless you’re an insurance industry veteran who specialises in term life policies, you’re probably not going to know how much coverage you need when purchasing your first policy. However, modern technology has provided a nifty solution to this ancient problem with the advent of the life insurance calculator. With this simple yet highly effective tool, you can work out how much coverage is enough for you and your family.
Why It’s Crucial to Choose the Right Level of Coverage
If you lead a busy life with a packed work and social schedule, you won’t have time to spend on complex calculations before buying a life insurance policy. You may think it’s not even worth spending a few minutes with a life insurance calculator to determine an appropriate level of coverage for your first policy, and if so, you wouldn’t be alone. Many people are tempted to save time by choosing a level of coverage that far exceeds their projected requirements. While this may initially sound like a good idea, it’s far from the best course of action to take. A policy that pays out a lump sum far in excess of your family’s needs will cost a lot more money than you should be paying for life insurance, putting unnecessary stress on your finances. Choose the right level of coverage for the most economical solution.
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So How Do Life Insurance Calculators Work?
Most online life insurance calculators are easy to operate. Using a proprietary formula, they calculate the right level of coverage based on some figures provided by each individual who uses them. If you’d like to find out what the ideal level of life insurance coverage for your needs is, be prepared to supply the following information:
- Your Annual Income
- How Many Years You Would Like Your Family to Continue Receiving This Income
- Any Debts and Known Future Costs You Would Also Like Your Policy to Cover
- Current Savings and Retirement Plans
- Projected Benefits From Existing Life Insurance Policies
Having entered all of the above information, the life insurance calculator should then provide you with the answer you seek: the amount of life insurance coverage you should be purchasing.
The Alternatives
If you’ve plenty of time to spare and have a good head for maths, you can probably calculate an appropriate level of coverage without the help of a calculator. You may also decide to consult a life insurance professional. However, for a quick answer that should be fairly accurate, a life insurance calculator is hard to beat.
