How is it calculated?

ü1. Adjust salary down to compensate for the reduction in household expenses

    2. Choose the appropriate interest rate to match the assumed after-tax and after-inflation earnings on the policy settlement.

ü3. Determine the income stream replacement and annuity

The Needs Approach

üHow is it calculated?

1. Adjust the salary downward

2. Add up all funding needs

The total needs of the beneficiaries includes: immediate, debt elimination, transitional, dependency, spousal life income, education, and retirement funds

3. Subtract current insurance coverage and other available  assets

This is additional coverage necessary

4.  Determine the income stream replacement and calculate the needed annuity

Life Insurance and Your Investment Plan

V.  What Kind of Life Insurance?