As long as an individual is alive, regulating the affairs of the family and providing for them are their top-most priority. However, there are certain unpleasant situations that no one can escape, such as death. If you are the sole earning member of your family, and everything, right from your spouse’s needs to your children’s education, depends on you, then the family will have a tough time making ends meet without you; this is where life insurance steps in.

A life insurance is a contract between the policyholder and the insurer, where the insurer guarantees to pay a sum of money to the policyholder’s nominee in exchange for the premium that is paid by the policyholder till the time of their death. Moreover, the insurer can approve of payment in case of terminal illnesses as well, but this depends on the type of life insurance you have chosen.

Before setting out to buy a life insurance, you need to calculate how much life insurance you need to cover the burial expenses and provide for your family posthumously.

You can use a life insurance calculator to calculate the amount of life insurance you need. Any life insurance calculator you use will require you to go through these steps to calculate the exact amount of life insurance you need for your family to get through this difficult period. Every life insurance calculator you come across will ask for the following details:

• Total income
• Current savings and investments, not inclusive of retirement funds
• The value of life insurance in force of your life
• The number of years the income has to be provided to your family
• Current retirement savings

These details help you calculate the life insurance your family will require in the event of your death. You can use the free online life insurance calculators such as the ones made available by AIG Direct, TomorrowMakers, AccuQuote, or New York Life.

Here are some essential tips that will help you use a life insurance calculator more efficiently and determine the value of the factors that are considered for the same.

• To gauge the amount of life insurance required, you need to determine your income and assets. Life insurance is usually calculated as a factor of the individual’s income. If you have other income sources, you might not need a policy that replaces 100% of your lost income.
• Also, the age at which you opt for a life insurance policy has a major impact on the life insurance coverage you need for your family. If you have just started your career, you will need a bigger life insurance policy since you are looking for a policy that can replace 40+ years of income in worst-case scenarios. So, if you are at the beginning stages of your career, you will have to consider opting for a higher life insurance coverage.
• This might seem very harsh, but you need to determine your life insurance coverage on the basis of how healthy you are. To put it in a euphemistic way, your current health condition and vulnerability to certain health conditions determine the amount of life insurance coverage you need; poor health conditions call for a bigger life insurance policy, inevitably leading to higher premiums.
• Your spouse will be eligible for Social Security survivor benefits in the event of your demise. If such is the case, you wouldn’t need a bigger life insurance cover. If you see yourself availing of Social Security benefits, then you wouldn’t have to opt for life insurance policies with heavy premiums to support your spouse.
• A factor that has a major impact on your life insurance coverage is whether your spouse is employed. If your spouse monetarily depends on you, then you will need a bigger life insurance coverage. You need to consider the exact amount of money needed to support your family in future.
• While using the life insurance calculator, you need to consider a plethora of factors, and your children’s education holds a prime position among them. Calculating the amount of money that goes into your children’s college education is quite risky. However, you can use a simple logic to arrive at a conclusion; college tuition fees are rising by 5% every year, which is almost the exact same rate at which life insurance grows over time. So, you can look up the current costs for colleges and gauge the increase in the tuition fees by the time the life insurance coverage will become active.
• Life insurance policies actively help the deceased individual’s family live with dignity when the only earning member of the family passes away. In addition to this, it helps the family pay off the debt left behind by the deceased, such as total your mortgage balance, student loans, and car loans. Thus, ensure that you choose a life insurance policy that helps them pay off these debts and still have money to live peacefully.