Life insurance planning is a critical component of overall financial planning, ensuring that your loved ones are financially protected and your financial goals are met even in your absence. Life insurance planning involves evaluating your financial needs and goals to determine the type and amount of life insurance coverage that best suits your circumstances.
A life insurance planning calculator serves as an important tool to help an individual make an informed decision about their life insurance needs, ensuring that the coverage amount matches their life financial goals and provide peace of mind for themselves and their loved ones.
How does the Insurance planning calculator work?
Imagine, you are the primary breadwinner of his family. You want to ensure that your family is financially secure in case of his unexpected demise. You have the following financial details:
Annual household expenses: Rs. 6,00,000
Outstanding loans (mortgage, car loan, and personal loan): Rs. 20,00,000
Current Fixed Deposit (FD) rate: 6%
Expected inflation rate: 6%
Number of years he wants to protect his household expenses: 20 years
With a life insurance planning calculator, you input the provided variables to determine your future household expenses, the required loan repayment amount, and any additional financial protection needed. This calculator computes your ideal life coverage by considering monthly household expenses, outstanding loans, the prevailing FD rate, expected inflation, the desired protection duration, and specific financial goals like funding a child's marriage, buying a dream house, or acquiring a dream car. The total insurance coverage will be the sum of future household expenses, outstanding loans, and additional financial coverage.
