Transamerica - Life Insurance Needs Calculator

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Life Insurance Needs Calculator

Life insurance provides protection for your family in the event that you are no longer able to provide for them. Your income plays an important role in maintaining your family's standard of living. It's important to take the time to prepare now to help ensure that your family will be set financially in the future. Take a few minutes to provide us with some information, and we'll help you determine your approximate life insurance needs.

The following calculator helps you to estimate the total amount of life insurance that you will need. You should rerun this calculation each time you have a child or your life changes significantly.

EXPENSES

Living Expenses:
Using the Monthly Cash Flow Calculator estimate how much money your family will need monthly to maintain their current standard of living. Adjust this number up or down to account for things such as expenses that would increase or decrease in your absense, such as child care costs or insurance coverage.
Funeral Expenses:
Funeral and other expenses often run between $4,000 and $10,000.
Estate Administration Expenses:
Your spouse may be charged an average of 5% of your family's asset value to handle the estate. Use the Net Worth Calculator to determine your asset value (not the net worth - the asset value). Multiply by 5% to determine administration expenses.
Taxes:
For taxable estates valued under $1,000,000, estate taxes will generally not apply. If your taxable estate is valued over $1,000,000, your estate may be liable to pay marginal estate tax rates as high as 50%. You will want to consult with an estate tax professional to lower this expense, but account for it here.
Mortgage and Other Loan Payoffs:
It would make life much easier for your family if all loans were erased. (Note: Loan amounts entered here are assumed to be paid off by life insurance proceeds, therefore, the related loan payment(s) must be deducted from the Monthly Cash Flow Calculator.)
College Costs:
If you plan to send your children to college, enter the lump sum savings amount returned from the College Costs Calculator for each child.
Other Expenses:
Enter any other expenses you may wish to cover, such as emergencies, cars for the kids, etc., in today's dollars.

INCOME

Spouse's Income:
Enter your spouse's annual income after taxes.
Social Security Income:
Enter the amount of money your spouse will receive annually from Social Security. Social Security benefits are paid immediately if you have children under age 18 and they remain in school. You may call the social security administration to get an exact reading based on your contributions and number of children. If you have children and want to enter a rough but fairly accurate number use $20,000. If you do not have children enter 0.
Other Income:
Enter the total annual income your spouse will receive from any other sources, such as your employer retirement fund, union funds, 401(k), etc.

OTHER INFORMATION

Years of Social Security:
Enter the number of years until your youngest child reaches age 18. If you have no children enter 0 here.
Spouse's Age:
Enter your spouse's age.
Existing Life Insurance:
Enter the value of any existing life insurance policies you have.

Total Life Insurance:
This is an estimate of the total amount of life insurance you need.

Even if the Total Life Insurance figure is negative, you may want to consider life insurance for other financial planning needs. Your Transamerica representative can explain other purposes for life insurance and other products that can help you acheive your goals.

This calculator makes several assumptions and it will be helpful if you understand them:

Except for the amount used to pay off outstanding loans, it is assumed that all life insurance money will be deposited in ultra-safe investments such as CDs should you die. This is generally the case. It is assumed that CD rates of return, after taking taxes and inflation into account, are zero.
Your current assets such as retirement accounts, savings accounts, investment accounts, home equity, etc. are not considered in order to simplify the calculation. A financial planner or estate lawyer would be a good person to talk to if you have significant assets.
It is assumed that your spouse has no outside retirement savings, will retire at age 65 and will live to age 80. During retirement, your spouse's living expenses are assumed to be 80% of the expenses entered in the Living Expenses field.
"Spousal Income" and "Other Income" are assumed to end at age 65.

This calculator is furnished by Smartmoney. Smartmoney is not associated with Transamerica Life Insurance Company nor any of its affiliates. While Transamerica provides this calculator as a service to its clients, Transamerica does not guarantee its accuracy, nor does Transamerica give tax or legal advice. Clients and prospects must consult with and rely solely upon their own independent advisors regarding their particular situation. The results and explanations generated by this calculator are hypothetical and will vary due to user input and various assumptions. Transamerica does not guarantee the accuracy of the calculations, results, explanations, nor their applicability to your specific situation. We recommend that you use this calculator as a guideline only. A Transamerica representative can help you with the calculator and your results, and answer any questions you may have.

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