Life Insurance Calculator

How much life insurance do you need?

We'll look at the following to determine how much you need.

  • Debts and Estate Settlement
  • Other Cash Needs
  • Survivor Income
  • Survivor Income Available
  • Resources
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Step 1: Debts and Estate Settlement

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Step 1: Results

Your Financial goal is:

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Step 2: Other Cash Needs

College Expenses (Click Add for each child you wish to account for)

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College Expense: Add Child

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Calculated Cost

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Step 2: Additional Cash Needs Results

Your additional cash needs are:

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Step 3: Survivor Income Needs

How much income will your surviving family need?

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Step 3: Survivor Income Needs Results

Your survivor income needs are:

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Step 4: Survivor Income Available

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Step 4: Survivor Income Available Results

Your survivor income available is:

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Step 5: Resources

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What is the value of your current life insurance coverage death benefits?

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Step 5: Available Resources Results

Your available resources are:

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Choose a solution to review

1) Your Calculation Help

Choose a life insurance policy based on your calculation:

You need: $0

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2) A Good Start Help

Choose a life insurance policy based on Principal Financial's suggestion for a good safety net:

You need: $0

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3) Financial Security Help

Choose a life insurance policy based on Principal Financial's suggestion for financial independence:

You need: $0

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Your Summary

Financial Goal: $0

Gap: $0

Resources: $0

Based on your inputs, we've calculated your personalized solutions. Ask your financial representative to help you assess your insurance needs, your overall situation, your tolerance for risk and the type (or types) of insurance that would be most appropriate for your unique situation. You might be surprised to discover how little you need to set aside to achieve and protect your long-term financial goals.

A Good Start Summary

Financial Goal: $0

Gap: $0

Resources: $0

Based on your inputs, we've calculated your personalized solutions. Ask your financial representative to help you assess your insurance needs, your overall situation, your tolerance for risk and the type (or types) of insurance that would be most appropriate for your unique situation. You might be surprised to discover how little you need to set aside to achieve and protect your long-term financial goals.

Financial Security Summary

Financial Goal: $0

Gap: $0

Resources: $0

Based on your inputs, we've calculated your personalized solutions. Ask your financial representative to help you assess your insurance needs, your overall situation, your tolerance for risk and the type (or types) of insurance that would be most appropriate for your unique situation. You might be surprised to discover how little you need to set aside to achieve and protect your long-term financial goals.

How much do you owe on your home?

If you're a homeowner, add the principal balance of your mortgage to the balance of any home equity loans. Survivors can use life insurance proceeds to pay off the mortgage immediately. Or, they can choose to save the money and continue to make tax-favored mortgage payments. If you rent your home, leave this field blank.

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What other outstanding debts do you have?

Total the value of any outstanding debts your survivors may want to pay off immediately--car loans, credit card balances, charge accounts, and so forth. Life insurance can help your survivors become debt-free.

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What will it cost to settle your estate?

Settlement costs depend on where you live and the size of your estate. Typical costs range from 1% to 3% of total estate value.

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How much will your funeral cost?

Life insurance is perfect for creating cash to cover final expenses. A traditional funeral, including a casket and vault, costs about $6,000, although "extras" like flowers, obituary notices, acknowledgment cards or limousines can add thousands of dollars to the bottom line. Many funerals run well over $10,000.

Source: Federal Trade Commission, 2007

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How much will your survivors need for unplanned expenses?

Most financial professionals agree that you should have three to six months of income available in cash for emergencies.

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Will your survivors have any special needs?

Would you like to set aside money to care for a special needs child or an elderly parent? Do you want to make a bequest to a charitable institution or provide financial help for a brother or sister? Life insurance can provide money for special situations.

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Other needs

If you have other income needs--not included elsewhere--you would like to provide for your survivors, you may note them here by typing an average annual amount (e.g. $"10,000").

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College expenses

For each college-bound child, enter the current age, the amount you would like to fund for each year of school in today's dollars, and the number of years required to complete a desired degree program. We will calculate the total amount needed.

In 2006, the average annual cost for a private college was $32,000. The average cost for an in-state university was $15,600. These costs increase about seven percent annually. Source: Trends in College Pricing 2006, The College Board.

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Percentage of income to continue?

Many experts believe that a surviving family will require about 70% of previous income. But the actual percentage depends on a number of factors. Will your spouse work? Will your mortgage be paid off? Are there children living at home? Enter your current annual family income with a percentage, and we will calculate the amount needed.

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How many years would you prefer to assure this income?

Since the objective is to provide income that outlives your spouse, we suggest you subtract your spouse's current age from 90 (the average mortality life expectancy at retirement based on the total U.S. population) this number can dramatically impact your need for survivor capital.

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How much annual income will your surviving spouse earn?

If your spouse isn't currently working and will not join the workforce, leave this field blank. If it's likely that your spouse will be employed, enter an estimated gross annual income amount.

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How many years will your surviving spouse work?

Subtract your spouse's current age from their planned retirement age, and enter the number of years. Remember, your spouse may choose to work longer, or collect Social Security benefits as early as age 60.

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What annual Social Security benefits will be available for your children?

Enter the estimated annual Social Security benefits for your surviving children. For an exact figure, call 1-800-772-1213, toll-free.

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Enter the number of years benefits will be available

Survivor benefits for children typically last until the child is 18.

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What annual Pension/Social Security retirement benefits will be available for your family?

Enter the estimated annual Social Security and Pension benefits for your spouse during retirement. Social Security benefit amounts (survivor and/or personal benefits) can be estimated by calling the Social Security Administration at 1-800-772-1213 toll free or using the benefit estimate from your Annual Statement. Benefit amounts for employer pension(s) may come from your annual statement or your employer.

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What is the value of your current assets?

Include the current value of stocks, bonds, 401(k) assets, mutual funds, savings accounts, and so forth.

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What is the value of your current group life insurance coverage?

Include life insurance provided by your employer as well as policies you've purchased on your own.

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What is the value of your current individual life insurance coverage?

Include life insurance provided by your employer as well as policies you've purchased on your own.

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What is your long-term inflation assumption?

Inflation between 1961 and 2005 average 4.7% according to the CPI-U for all urban consumers as reported by the National Bureau of Labor Statistics.

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What is your long-term average rate of return assumption?

Traditionally, average investment earnings will vary based on the type of portfolio you assemble. The specific types investments you hold depend on your ability to accept investment risk. Portfolio rates of return can be influenced by your life stage as well, but are typically either income or growth oriented. Growth portfolios may have rates of return of between 7% and 10% over long periods of time and income portfolios may have rates of return of between 6% and 9%. If you are more than 5 years from your retirement date, you should target a growth-oriented portfolio.

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Your calculation

This result is based on your answers to the questions and may help satisfy your priority needs.

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A Good Start calculation

This result calculates a basic safety net of protection for your family and heirs. This solution reduces the amount of income your heirs will receive--and possibly shortens the amount of time they'll receive it--but it provides a foundation you can build upon as your income and resources grow.

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Financial Security calculation

This result has been calculated to help assess financial independence. It calculates additional amounts of income for your heirs or adds additional years to the length of time the income will be provided.

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