How to Calculate Your Insurance Coverage Amount
Do you have a family that's dependent on you, then you surely need life insurance. But the amount of insurance coverage will be calculated based on many factors like household expenses, children education, their marriage and EMI's etc. One should use this calculator to determine how much insurance cover they need so that their family leads a comfortable life if something goes wrong with them.
Life insurance is based on the following simple concept: You have some financial responsibilities in your life - for e.g. household expenses, EMI, children's education/marriage etc. If something happens to you, the proceeds from your life insurance policy are expected to cover your financial responsibilities in your absence.
1. Search the web for a life insurance calculator. it should take into account some basic financial goals and responsibilities that people have their lives.
2. Identify each goal. Then assign a monetary value to the goal. Finally, pick a date at which this goal needs to be met. For eg: Raj wants to pay for his son Ravi's education (goal name). This will cost approximately RS 10 lakhs in today's costs (goal amount). Ravi's education is planned for 2012 (goal date).
3. Identify your current household expenses. These will be the general level of expenses that your family needs to maintain its current standard of living Foreg. Raj needs Rs 25,000 per month, or Rs 3 Lakhs per annum towards household expenses.
4. Identify the sum total of all your outstanding loans - home loans, car loans, personal
loans etc. E.g. Raj has a car loan outstanding of Rs 2 Lakh and a home loan balance of Rs. 20 Lakhs. Total loans outstanding are Rs 22 Lakhs
5. Enter your current age. E.g. Raj is 33 years of age.
6. Press Calculate button after filling all the above details.
7. Chart plotted at the end shows that if you die tomorrow, how the insurance proceeds amount that your family receives, will grow at risk free rate and help them finance their expenses and goals each year.
Do you have a family that's dependent on you, then you surely need life insurance. But the amount of insurance coverage will be calculated based on many factors like household expenses, children education, their marriage and EMI's etc. One should use this calculator to determine how much insurance cover they need so that their family leads a comfortable life if something goes wrong with them.
Life insurance is based on the following simple concept: You have some financial responsibilities in your life - for e.g. household expenses, EMI, children's education/marriage etc. If something happens to you, the proceeds from your life insurance policy are expected to cover your financial responsibilities in your absence.
1. Search the web for a life insurance calculator. it should take into account some basic financial goals and responsibilities that people have their lives.
2. Identify each goal. Then assign a monetary value to the goal. Finally, pick a date at which this goal needs to be met. For eg: Raj wants to pay for his son Ravi's education (goal name). This will cost approximately RS 10 lakhs in today's costs (goal amount). Ravi's education is planned for 2012 (goal date).
3. Identify your current household expenses. These will be the general level of expenses that your family needs to maintain its current standard of living Foreg. Raj needs Rs 25,000 per month, or Rs 3 Lakhs per annum towards household expenses.
4. Identify the sum total of all your outstanding loans - home loans, car loans, personal
loans etc. E.g. Raj has a car loan outstanding of Rs 2 Lakh and a home loan balance of Rs. 20 Lakhs. Total loans outstanding are Rs 22 Lakhs
5. Enter your current age. E.g. Raj is 33 years of age.
6. Press Calculate button after filling all the above details.
7. Chart plotted at the end shows that if you die tomorrow, how the insurance proceeds amount that your family receives, will grow at risk free rate and help them finance their expenses and goals each year.
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