Insurance Calculator and Rule of Thumb

Insurance Calculator

How much Life Insurance do I need?  This is the most common question that we receive.  Below is the link to two helpful calculators.  If you are one for details, you will love these two tools in helping you come to a more accurate number. 

First, use the "College Savings" calculator if you have dependants to determine the cost of that need.  Write that number down.

Next, run the "How Much Life Insurance Do I Need?" calculator.  Insert your data into the categories on the right (Update the information for each tab).  Use the number you received from the "College Savings" calculator to fill in the information under the Expenses at Death category. Once you are finished filling in your information, click Calculate for your personal Life Insurance need.

Rule of Thumb

If you hate calculators and you just want a simple Rule of Thumb, here it is.  Typically, you need 8 to 10 times your annual income in a death benefit. If you're younger and just starting a family, you might need as much as 15 times your income to allow for salary increases.

Identifying Your Needs for Life Insurance

Most people need affordable life insurance. It's that simple. No matter your age, marital status, or whether you have dependent children or not, life insurance is an important safeguard to consider for you and your family's financial future.

To help you identify your needs for life insurance, review the life scenarios to see how life insurance may benefit you and your circumstances.

When you're ready, compare life insurance quotes and obtain low cost life insurance quotes from QuoteMe.

Single Supporting Loved Ones

Do you provide financial support for your parents, brothers or sisters? Do you have significant debt that you do not want to pass on to your family members? Most single people typically do not consider purchasing life insurance until these factors are considered. If you have loved ones who depend upon you financially or you want to protect your family from any of your own debt or final expenses, you should have life insurance coverage.

Married with (or without) Children

For richer, for poorer, in sickness and in health, affordable life insurance is an important part of your financial plan. Consider what the future would look like without your financial contribution to the household.

• Would your spouse's income alone provide support for ongoing living expenses?
• Would your spouse be able to cover your final expenses (e.g. funeral costs, medical bills, taxes, household or business debts, legal fees, etc.)?
• Would your financial plans for the future be realized or diminished by your untimely death?

Married couples with or without children should have affordable life insurance in place to protect what you have today and to care for your loved ones in the future.

Stay-At-Home Parent

Being a stay-at-home parent doesn't mean that you are not making a financial contribution to the household. Providing around-the-clock childcare and managing the day-to-day household activities equate to valuable services that would otherwise need to be paid to support and preserve your family's quality of life. Your life insurance coverage can continue to support your family in the way you care for them today.

Single Parent

Raising the family on your own requires you to look out for so many things. On the day-to-day, you make sure the kids are healthy, happy, and doing well in school. Then, there are your long-range goals for them, like college. Being a single parent, there is so much to consider for your family's future. This is why having affordable life insurance in place to preserve your family's quality of life in the future is just as important as the day-to-day care you give them today.

Quick Tip: If you are not already covered, life insurance rates increase as you age. To save on life insurance it is ideal to purchase term life insurance as young adults to lock in premium rates for the term of your policy - 10, 20, even 30 years. The low rate stays the same for the duration of the term, even if your health declines during your term of coverage.
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Empty Nester Free and Clear of a Mortgage

There's a sense of financial freedom when you get to the point where you raised your kids and find them now on their own and self-supporting. You own your home free and clear of any mortgage payments and look forward as you near retirement. Unfortunately, your retirement plan savings and social security may not always cover living expenses for your spouse and other dependents if you were to pass away suddenly.

• What would happen if you experienced terminal illness later in life where medical bills chipped away at your nest egg?
• Are your spouse's living expenses accommodated for the next 10, 20, even 30 years?

It's never too late to consider term life insurance to protect what you've worked so hard to achieve over the years and to pass on to your spouse, children, even grandchildren in the years to come.

Life insurance rates do increase with age. Affordable term life insurance may be an option based upon your age and health class.
Low Cost Life Insurance Quotes Online Now >>

Retired in the Golden Years

In preparation for retirement, you probably addressed planning for your estate so everything is in order. Having piece of mind at retirement means enjoying what you worked hard for and setting up your family for what you leave behind. Having a life insurance policy in place early in life ensures your family can take care of estate taxes, final expenses, and other debts down the road. Additionally, the proceeds of a life insurance policy are generally income tax free and can be structured to avoid probate and mitigate further estate tax liability.

Small Business Owner

There's so much to consider when you're your own boss. Life insurance can protect your business in the event of your death, the death of one of your business owners or key employees. Life insurance can protect you, your family, and your business in a number of ways, for example:

• Buy-Sell Agreement - Ensures that the remaining business owners have the funds to buy the company interests of a deceased owner at a previously agreed upon price. The owners assume the business interests/shares and the family gets the financial proceeds from the buy-out.
• Key Person Insurance - Provides the owners of your small business with the financial flexibility to protect your company's solvency in the event of losing a key employee or founder. Safeguarding your company and minimizing the disruption of your operations not only makes good business sense, but lenders and investors also generally require that a business carry key-person insurance to protect their loans and investments in your company.

Contact Us

For more information on purchasing term life insurance for your business, please Contact Us and an Licensed Agent can assist you.

Get a Quote for Term Life Insurance

Instantly compare term life insurance quotes from highly rated companies. See how much you can save on affordable protection for you and your family.
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Basic Insurance Terms A-Z (Almost)

A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z

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A

Accidental Death Benefit
An extra death benefit amount that is paid out in addition to the face amount of the policy if the insured dies as the result of an accident. It cost extra to get this benefit, and usually cannot exceed $250,000 to $300,000, and cannot exceed more than the face amount of the policy.

Accelerated Death Benefit Option
In the event of terminal illness, usually l year or less, the insured has the option to withdraw some of the death benefit for his personal use. Usually no more than 25% and usually not exceeding $250,000. This option is usually free and is offered by some insurance companies.

Age
Most insurance companies calculate age by using the age you are nearest to. Example: Insured is 45 and it is January, and the insured's birthday is in March. If the insurance company was calculating age nearest, the insured would be considered age 46 for the purpose of calculating rates.

Assignment
The transfer of the ownership rights of a Life Insurance policy from one person to another.

Aviation Hazard
The extra hazard of death or injury resulting from participation in aeronautics. It usually does not include fare-paying passengers in licensed aircraft. This generally will require paying extra premium or the waiving of certain benefits of coverage.

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B

Backdating
A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get lower premium. State laws often limit to six months the time to which policies can be backdated. You must pay premiums from the effective date of the policy.

Beneficiary
The person designated to receive the death benefit when the insured dies.

Business Insurance
Policies written for business purposes, such as key employee, buy-sell, business loan protection, etc.

Buy-Sell Agreement
An agreement among owners in a business which states the under certain conditions, i.e., disability or death, the person leaving the business or in case of death, his heirs are legally obligated to sell their interest to the remaining owners, and the remaining owners are legally obligated to buy at a price fixed in the Buy-Sell agreement. The funding vehicles are either disability or life insurance or both.

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C

Children's Term Insurance Rider
Provides term insurance to the insured's dependents. It is a flat premium for all his dependents and the benefit usually is not less than $1,000 or more than $10,000.

Collateral Assignment
Assign all or part of a life insurance policy as security for a loan. If the insured dies the creditor would receive only the amount due on the loan.

Contestable Clause
A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested. Example: Suicide. Generally each new policy has a new contestability period.

Contingent Beneficiary
A person or persons named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.

Convertible (conversion)
A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.

Credit Insurance
Insurance on a debtor in favor of a creditor to pay off the balance due on a loan in the event of the death of the debtor.

Cross Purchase
A form of business life insurance in which each party purchases life insurance on each other.

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D

Decreasing Term
A form of life insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term.

Delivery
The actual placing of a life insurance policy in the hands of an insured.

Double Indemnity
Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.

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E

Entity Agreement
A buy-sell agreement in which the company agrees to purchase the interest of a deceased or disabled partner.

Evidence of Insurability
The statement of information needed for the underwriting of an insurance policy.

Examination
The medical examination of an applicant for Life Insurance. Examiner: A physician, nurse, or para-med appointed by the medical director of a life insurance company to examine applicants.

Expire
The termination of a term life insurance policy at the end of its period of coverage. Face: The first page of a life insurance policy.

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F

Face Amount
The amount of insurance provided by the terms of an insurance contract, usually found on the face of the policy. In a life insurance policy, the stated death benefit.

Fixed Benefit
A benefit, the dollar amount of which does not vary.

Free Look
A period of time(usually 10, 20, or 30 days) during which a policyholder may examine a newly issued individual life insurance policy, and surrender it in exchange for a full refund of premium if not satisfied for any reason.

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I

Incontestable Clause
A clause in a policy providing that a policy has been in effect for a given length of time (usually two years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.

Insurability
Acceptability to the insurer of an application for insurance.

Insurance
A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.

Insurance Policy
The printed form which serves as the contract between an insurer and an insured.

Insured
The party, who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.

Insurer
The company that pays out the death benefits if the insured dies.

Irrevocable Beneficiary
A beneficiary that cannot be changed without his or her consent.

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K

Key Person (Key Man) Insurance
Insurance on the life of a key employee whose death would cause the employer financial loss. The policy is owned and payable to the employer.

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L

Lapsed Policy
A Insurance policy which has been allowed to expire because of nonpayment of premiums. In a cash value life insurance policy such as Whole Life or Universal Life the policy could expire because the cash value account reached a zero balance and no premium payments are being made to replenish it.

Level Term Insurance
A type of term policy where the face value remains the same from the effective date until the expiration date. However, after stated term period the level premium period on most policies turn into Annual Renewable Term where the premiums increase annually.

Life Expectancy
The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.

Life Insurance
An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured.

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M

Medical Information Bureau (MIB)
A data service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most Life insurers subscribe to this bureau to get more complete underwriting information.

Mortality Charge
The charge for the element of pure insurance protection in a life insurance policy.

Mortality Cost
The first factor considered in life insurance premium rates. Insurers have an idea of the probability that any person will die at any particular age; this is the information shown on a mortality table.

Mortality Rate
The number of deaths in a group of people, usually expressed as deaths per thousand.

Mortality Table
A table showing the incidence of death at specified ages.

Mortgage Insurance
A life policy covering a mortgagor from which the benefits are intended to pay off the balance due on a mortgage upon the death of the insured.

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N

Nonmedical (Non-Med)
A contract of life insurance underwritten on the basis of an insured's statement of his health with no medical examination required.

Not Taken
Policies applied for and issued but rejected by the proposed owner and not paid for.

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O

Occupational Hazard
A condition in an occupation that increases the peril of accident, sickness, or death. It usually will mean higher premiums.

Ownership
All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insured. Ownership may be assigned or transferred by written request of current owner.

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P

Permanent Life Insurance
A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as Whole Life Insurance or Universal Life.

Policy Fee
There are two calculations to determine the premium for term insurance. The Policy Fee which is a flat fee added to each policy and the rate per thousand times the number of thousands of death benefit. The policy fee is usually the same for all ages and amounts but varies from company to company.

Preauthorized Check Plan
A premium-paying arrangement by which the policy owner authorizes the insurer to draft money from his or her bank account for the payments. This is usually done on a monthly basis.

Preferred Risk
Any risk considered to be better than the standard risk on which the premium rate was calculated. Some companies are now offering degrees of preferred to reduce their rates even more. An extremely healthy person can now get extraordinary low rates.

Premium
The price of insurance protection for a specified risk for a specified period of time.

Primary Beneficiary
The beneficiary named as first in line to receive proceeds or benefits from a policy when they become due.

Provisions
Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.

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R

Rated
Coverage issued at a higher rate than standard because of some health condition, or impairment of the insured.

Renewable Term
Term insurance that may be renewed at the option of the policy holder for another term without evidence of insurability. Level term usually turns into renewable term with increasing premiums after the level premium period.

Replacement
A new policy written to take the place of one currently in force.

Revocable Beneficiary
The beneficiary in a life insurance policy in which the owner reserves the right to revoke or change the beneficiary. Most policies are written with a revocable beneficiary.

Rider
An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.

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S

Standard Risk
A risk that is on a par with those on which the rate has been based in the areas of health, physical condition, and morals. An average risk, not subject to rate loading or restrictions because of health. At one time the best class of risk was the standard class. As the insurers improved their underwriting skills, they were able to define those in very good health and offer them better rates with the new preferred class. Now some insurers have even developed different levels of preferred.

Stock Purchase Agreement
A formal buy-sell agreement whereby each stockholder is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obligated to sell. This agreement is usually funded with life insurance.

Stock Redemption Agreement
A formal buy-sell agreement whereby the corporation is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obliged to sell. This agreement is usually funded with life insurance.

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T

Term Insurance
The type of life insurance that provides protection for a specified period of time. It usually has no real cash build up.

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U

Underwriter
A technician trained in evaluating risks and determining rates and coverage for them. When an application is submitted to the insurer, it is the underwriter who gathers all the necessary information to determine whether a person is a preferred risk, a standard risk, or rated.

Underwriting: It is what the underwriter does to determine the class of risk an applicant will be placed in.

Universal Life
An interest sensitive life insurance policy that builds cash values. The premium payer has control on how the policy is structured. He has the flexibility to "vanish the premiums" (pay no more premiums based on assumptions that are not guaranteed) or have the premiums continue for life. It is a matter of juggling 3 variables. The assumed interest rate, the cash value and the premium payment plan. The policy is interest sensitive , and if interest rates change from the illustrated interest, it will effect the other two variables. In the past, many Universal Life Policies were illustrated assuming a higher interest rate then was subsequentially actually received, therefore, most of them have under performed. If you have a Universal Life Policy, you should have it evaluated to see if it needs to have the premiums adjusted to get it back on track. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the Mortality variable. Universal Life policies are usually structured assuming current mortality rates. The insurance companies reserve the right to change those rates. To my knowledge this has never been done.

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W

Waiver of Premium
A provision of a life insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled.

Whole Life Insurance
Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. The variable in a whole life policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policyholder in the form of dividends.

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FAQ

Q: How much term life insurance do I need?

A. Since life insurance replaces lost income if something happens to you, the proceeds from your policy should be enough to cover immediate expenses as well as to provide continuous income for your beneficiaries. Most financial planners recommend coverage that's 8 to 10 times your annual income. For example, if you make $50,000, you might consider coverage between $400,000 and $600,000. If you're younger and just starting a family, you might need as much as 15 times your income to allow for salary increases. Since individual needs vary, we recommend that you speak to one of our licensed agents to help you determine what's right for you. We also recommend you consult your attorney or financial advisor for professional legal, tax and financial planning advice.

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Q. What does 'guaranteed' mean?

A. 'Guaranteed' refers to the annual premium you pay on your policy. For example, a fully guaranteed 20-year term means that your premium is guaranteed to remain the same, or level, for a full 20 years as long as you pay the premium. The coverage, or death benefit, also remains level. The insurance company cannot cancel your policy or raise your premium for the length of the term, as long as you pay the premium. The same is true for 10-year, 15-year, 25-year, and 30-year guaranteed terms.

Some companies offer term policies that are partially guaranteed. We recommend that you consider only policies that are fully guaranteed, so that your rates cannot change for the length of your policy.

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Q. How long do I need protection?

A. The number of years' coverage you need depends on several things, but the most basic consideration is how long you expect your beneficiaries to be dependent upon your income. If your spouse is your beneficiary, you should consider being covered until you plan to retire. If it's your children, you'll probably want to protect them until they're 18 or finish college. To cover a mortgage, choose a policy that will be in place for at least the length of the loan. Depending on your age, you can purchase policies guaranteed for 10, 15, 20, or even 30 years.

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Q. Should I get coverage for my spouse?

A. The need for Term Life coverage applies equally to income-earning spouses, and there are strong arguments for acquiring life insurance for a partner who is not drawing an income as well. For instance, losing a stay-at-home spouse can lead to dramatically increased child-care costs, time away from work for the surviving spouse, final expenses, the settling of outstanding debts, and these are just the financial aspects of such a serious loss. The rule of thumb is to get at least 50 percent of the term life coverage for a stay-at-home spouse as for the primary breadwinner.

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Q. I've had some health issues. Can I still get insurance?

A. There's a very good chance you can. Our agents have helped many clients, including cancer survivors and those with diabetes or heart disease, get the coverage they need at the best price available.

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Q. How do I get the right price on the best policy for me?

A. It's easy. Simply answer all of the questions on your application honestly, complete your medical exam (at no cost to you) and promptly return any forms required by the insurance company. We'll take care of everything else.

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Q. How long does it take to get a policy?

A. Typically, it takes 4-7 weeks after your application is submitted to get the policy in your hands.

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Q. Do I have to take a medical exam?

A. Yes. Almost every one of our companies require applicants to take a brief paramedic exam, which includes blood and urine samples. In some cases, you may also be required to have additional tests at the request of the insurance company. The exam is at no cost to you and takes place at your home or office when it's convenient for you. It usually takes less than 20 minutes.

In most states, we also offer an express underwriting policy, which does not entail a medical exam. The cost for such coverage is somewhat higher than the cost of a comparable fully underwritten policy.

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Q. Do I have any coverage while I'm waiting for my policy?

A. It depends. Some people want to get the official quote after they have gone through underwriting to pay their first premium. In doing so, they are not covered until the premium is received and the policy is inforce. With most of the insurance companies we represent, once your application, initial premium, and completed medical exam have been sent to the insurance company, you may be eligible for temporary conditional insurance while your policy is being approved. Terms and conditions vary by company and state, but are explained in detail on your insurance application. Your personal representative will explain how it works.

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Q. I already have a life insurance policy. What should I do with it?

A. If you wish to replace a life insurance policy with one through QuoteMe, you should not cancel your old coverage until you have received, reviewed and accepted your new policy. Cancel your old policy after all final requirements for the new one are complete and you have received notification from the insurance company that your policy is inforce.

Please make sure to consult your legal or tax advisor. The surrender of cash value policies may involve surrender penalties and tax consequences. New policies have contestability and suicide period provisions.

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Determining Your Health Class

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Use the Height and Weight Chart and the Underwriting Risk Guidelines / Health Ratings Chart below to help determine what rating class you should apply for.  In the video, we describe several other factors that determine how your policy will be rated and priced.  If you feel that you are in great shape, but do not fit this mold, contact us.  We specialize in finding you the right company for the right price.  Also, if you have health issues, we can cover impaired risk in most cases.

Height and Weight Chart

Preferred Plus

These amounts may vary a couple of pounds from one company to another, but they represent a good reference for you. If your weight exceeds the maximum shown use the "Preferred & Regular/Standard" tables below.

Height	Maximum Weight Men	Maximum Weight Women
4'10"	135	129
4'11"	139	132
5'0"	144	135
5'1"	148	138
5'2"	153	140
5'3"	158	143
5'4"	163	145
5'5"	168	148
5'6"	174	150
5'7"	179	155
5'8"	185	160
5'9"	190	165
5'10"	196	170
5'11"	201	175
6'0"	207	180
6'1"	213	184
6'2"	219	188
6'3"	225	193
6'4"	230	197
6'5"	237	201
6'6"	243	205
6'7"	249	209
6'8"	256	214
6'9"	262	218
6'10"	268	222
6'11"	276	226

Preferred and Standard

These tables can be used for either male or female insureds. These amounts may vary a couple of pounds from one company to another, but they represent a good reference for you.

Height	Maximum Weight Preferred	Maximum Weight Standard
4'10"	147	161
4'11"	152	166
5'0"	158	172
5'1"	163	178
5'2"	168	183
5'3"	174	190
5'4"	179	195
5'5"	185	202
5'6"	191	208
5'7"	197	215
5'8"	203	221
5'9"	209	228
5'10"	215	234
5'11"	221	241
6'0"	228	249
6'1"	234	255
6'2"	241	263
6'3"	247	269
6'4"	253	276
6'5"	260	283
6'6"	267	291
6'7"	274	299
6'8"	281	306
6'9"	288	314
6'10"	295	322
6'11	303	330

Underwriting Risk Guidelines / Health Ratings

Below is a basic guideline for underwriting in life insurance. It is important to note however that this information varies from life insurance company to life insurance company. This is not meant to provide exact underwriting criteria, rather as a guide to see where you may qualify. Our agents will take into consideration all your health related issues and can better access where you will be rated. Also there are some companies with more lenient restrictions in certain areas that may be available, so please be sure to consult with one of our agents.

Parameter	Preferred Plus	Preferred	Regular/Standard
Family	No cancer or cardiovascular death of either parent or sibling before age 60.	No cancer or cardiovascular death of either parent before age 60.	No more than 1 cancer or cardiovascular death of parents before age 60.
Blood Pressure	140/85	150/90	155/95
Cholesterol Levels	Under 220, HDL: Less than 5.0	Under 250, HDL: Less than 6.5	Under 280, HDL: Less than 8.0
Health History	No history of major health conditions, such as, cancer, diabetes, heart disease.	No history of major health conditions, such as, cancer, diabetes, heart disease.	Some major health conditions allowed.
Driving History	No more than 2 moving violations in the past 2 years. No record of DUI or reckless driving in the past 5 years.	No more than 2 moving violations in the past 2 years. No record of DUI or reckless driving in the past 5 years.	No more than 2 moving violations in the past year. No record of DUI or reckless driving in the past 2 years.
Tobacco	No use of nicotine products in past 3 years.	No use of nicotine products in past 2 years, also preferred smoker rates available.	No use of nicotine products in past 1 year, also standard smoker rates available.
Substance/Alcohol Abuse	No history of alcohol or substance abuse.	No history of alcohol or substance abuse in the past 10 years.	No alcohol or substance abuse in the past 7 years.
Aviation	available with additional rider.	available with additional rider.	available with additional rider.

Back to Determining Your Health Class

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