They say in life only two things are certainties – death and taxes.
You do not need a life insurance calculator to tell you that!
Is A Life Insurance Calculator Needed?
Statistics tells us that in 2013 there were 29,568 deaths registered in New Zealand.
When you look at the statistics in more detail we can tell you that people between the age of 35-40 make up 1% of those deaths while people aged 55-60 make up almost 5%. Of course most of the population these days lives beyond 80-years old, but if you were to die at an earlier age you want to know that your family is going to be okay financially.
But I Already Have Life Cover!
Most banks and insurance companies will calculate how much life insurance I need based on how much debt you have, but is this really the best way to work out what you need?
This often means people have the wrong level of insurance cover and are either paying too much or too little.
While nobody likes to talk about death and the financial consequences of a family member dying, it does happen and most of us want to know that our dependants are going to be looked after financially at least.
Calculate How Much Life Insurance Is Required
There are thousands of free online calculators available for various insurance calculations and one of the better ones is the Consumer life insurance calculator.
Consumer have a life insurance calculator to help you assess home much life insurance you need and focuses on what debts and expenses your dependants would face after your death.
The calculation suggests that all debts are paid in full including any mortgage, hire purchase and credit cards plus funeral costs are included – suggesting $10,000 as an average cost of a funeral. They then ask what ongoing income your dependants would need and for how many years and factors in any Government benefits or other income or cash they might have access to.
Visit the Consumer website to see for yourself.
The biggest issue with any life insurance calculator is they rely on the right assumptions being used and then any monies being invested correctly and spent wisely.
A Better Way To Calculate Life Insurance Requirements
Insurance advisers understand and have seen the reality of what happens to a family’s finances when someone dies and in particular when the main income earner dies and this is why most people will suggest that you talk to a reputable insurance adviser.
Unfortunately many people will underestimate how much life insurance they would need.
It is important to remember that life insurance is designed to provide financial compensation for a family on the death of someone that provides financial assistance and therefore you would like to think that you would receive financial compensation should that person is die.
But insurance is not about the emotional side of death, it is a very unemotional affair, providing financial compensation only.
Pay Off Debt First!
It is prudent to pay off the debt with life insurance as it means the ongoing living costs are less and therefore less insurance is required.
Most banks will suggest that you have enough insurance to pay your mortgage off, but really what they should be saying is reduce your expenses.
Luckily for most Kiwi’s the reality is the same.
You Can Buy Life Insurance Online
There are a lot of people today that would rather buy life insurance online than buy it at their bank or from an insurance adviser.
There is also a simple life insurance calculator here to help work out how much life insurance may be required, but like many online life insurance calculators it is not perfect.
Talk To An Insurance Adviser
Even though you can buy life insurance online, most people still prefer to talk with a “real” human. This is the same with any advice, but especially when you are talking about intangible things like long-term finance.
An insurance adviser is paid by the insurers and can therefore work at no charge, so it cost you nothing to ask the questions.