Term Life Insurance Calculator

How much term life insurance a person should be covered for depends on a few things and can be calculated a few different ways. A good term life insurance calculator could involve the insured's income, their potential for financial contribution over their life time or it can be base on their needs. If these three methods are compared, two or maybe even all three of the numbers should come out relatively similar and if they do, you know you are on the right track.

Simplest Term Life Insurance Calculator
This one's pretty easy. Simply take the amount of money that you make annually (your net take home pay) and multiply it by 10. As an example if you make $50,000 gross, pay 26% of that in taxes, your annual take home pay is $37,000. When you multiply that number by 10 you get $370,000 and that is the amount that your term life insurance policy should cover.

Financial Contribution Term Life Insurance Calculator
Calculating your needed coverage amount with this method is a bit more difficult. It involves calculating what your Human Life Value. A good website to go to for this calculation is http://www.lifehappens.org/life-insurance/human-life-value as it involves some serious math. This works best if you have a spouse or children and works to analyze the impact that your loss would have on them financially. The math is far too complicated to cover here and that is why you are invited to use the free calculation site.

Basic Needs Term Life Insurance Calculator
The needs approach is a little bit easier than the last one, but you still need to do some paper gathering. You want to find documents like bank and credit card statements and other potential debts that you may have. These are going to be added all together along with what your family might need. As an example, let's say you have a mortgage on a house for $125,000, you have three credit cards that amount to $35,000 of debt, you have a car that still has $3000 left to be paid on it, you suffered an injury that required medical care that your insurance didn't cover and now owe the hospital $3000 and let's throw in a college loan of $12000. All of this adds up to $178,000 and that means that you should be covered for at least that amount plus funeral expenses and other expenses (like long term storage of belongings, gambling debts, etc).

Another good rule of thumb is to round up. In the previous example, $200,000 or even $250,000 would be an appropriate amount to be insured for via a term life insurance policy. It is important to note that these calculations don't cover all factors and if you are at all unsure about the amount of coverage that you need, have a licensed agent go over your information in order to more accurately calculate your term life insurance coverage needs.