Calculate the Right Life Insurance Cover

of 8
Description
How much life insurance cover do you really need? Calculate the right cover for you in 3 simple steps!
Text
• 1. Calculate the RightLife Insurance CoverGet the right life insurance cover in 3 steps!Powered by
• 2. The Human Life Value (HLV)approach to calculating lifeinsurance requirementsaccounts for 4 factors:• Annual income• Annual expenses• Number of years to retirement• Inflation-adjusted cost ofexpensesHuman Life ValueThe HLV figure you arrive at should help you make a reasonably accurateassumption of the value of your income.
• 3. Step I• Your Annual Income =salary+bonus+employeebenefits+income frominvestments.• Deduct your personalexpenses (food, clothes, travel,etc) from the above.• What is left, is what yourfamily consumes per annum.
• 4. Step II• See how many years are left tillyou retire.• Project family expenses uptoretirement, allowing for reasonableincrements.•Subtract any pension benefitsyour family gets upon your death.•Add non-recurring expenses, likeyour children’s higher education.The shortfall of the below mentioned expenses is the amount that you shouldinsure yourself for.
• 5. Step III• Calculate the shortfall’spresent value, allowing for areasonable rate of inflation.• Factor in your existinginvestments by deducting yournet worth and accounting forany big-ticket loans, to arrive ata reasonable HLV figure.
• 6. Know Your Life Cover Needs• The HLV figure you arrive atshould help you ascertain theamount of life insurance coveryou need.• Since HLV is a moving target,keep reviewing it every 5 years,at the least.
• 7. Thank YouGet the right life insurance cover in 3 steps!Powered by