Many of you have put our online Life Insurance Quote Comparison Tool to the test and found that you can easily get life insurance quotes and find the best coverage available. When you are considering how much life insurance to buy, there could be a moment when you pause and try to wrap your head around what the appropriate amount should be. My quick and easy method, for years, has been to see the coverage amount as a lump sum that would address your beneficiaries’ “needs per month” over a period of time.
Allow me to explain. If I want my family to have a monthly amount to live on for 10 years, I can look at what we spend per month now and work from there. For example, say we currently spend $7,000 per month, so I want them to have $7,000 every month for 10 years after I’ve passed away. First, I would multiply $7,000 by 12 months to get an annual amount of $84,000. Then, multiplying that annual amount by 10 years would give me the total death benefit of $840,000. When the life insurance benefit is paid to my wife, she can reach into that lump sum “bucket” each month, taking out $7,000 for the next 10 years.
The beauty of this approach is that it uses current spending habits (not estimated future projections) to get to the end result. You may notice that this leaves a small item unaddressed – if my family’s current spending is $7,000 per month, my passing would leave a bit of extra funding, since my portion of the monthly spending will no longer be used. Once I leave the planet, my family’s expenses will shrink, leaving a bit more for my family in the death benefit.
Want to take that concept and apply it using the Life Insurance Quote Comparison Tool here at MoneyTips? We have recently added a needs calculator into the tool to give you just that ability. Here’s how:
- Click on the Rate Compare link at the right-hand end of the top menu on MoneyTips.com. From the dropdown list that appears, select “Life Insurance”.
- On the new page that appears, select your sex by clicking the relevant button. Then, enter your birthdate, indicate whether or not you are a smoker, and choose your general health status.
- .On the next screen, you will be presented with a range of permanent, term, and return of premium (ROP) term insurance quotes. This is where our brand new Needs Calculator comes in. If you’re not sure which of the quote options is right for you, click on the blue calculator icon to the left of the copy saying “Choose Amount and Length”. New fields will appear to help the Needs Calculator understand your situation better.
- Clicking on the calculator gives you the option of filling in your mortgage balance, the total balance of your other debt, how many children you are sending to college, how much annual income you would like to leave your beneficiaries, how many years you want them to receive that income, and how much savings and insurance you already have. If you desire, you can simply fill in I’d like my beneficiaries to have ______ per year for ______ years.
- Below these fields, the calculator will display the amount of life insurance you need to buy based on your inputs. You will see that this amount will change dynamically as you fill in the blanks. Click the “Update” button and the calculator will work out a new range of quotes based on your unique situation to provide total coverage for those you love.
We all get through life one month at a time, it seems. Getting through life well-funded, however? That takes planning. Start by giving the Life Insurance Quote Comparison Tool a test drive and see what number you come up with. No contact info is required for you to obtain a quote.
We listened to what you had to say about our service, made some changes, and we like the feedback we are getting from you. Get free life insurance quotes and apply for your top choice in minutes using our Life Insurance Quote Comparison Tool.