Using a Life Insurance Calculator – Dependable Option?

Written by Mike

Are you in the market for a life policy? If so, you are probably looking forward to securing coverage and getting the process out of the way.

Before you do anything, you need to decide how much life insurance you need. Most people have a difficult time making a final decision.

In addition to doing your own math, you can turn to your agent for assistance. Of course, there is one problem with this: can you really trust that an agent is telling you the truth? Or is he or she trying to sell you as much life insurance as possible to earn more money?

You may soon find yourself turning to one of many online life insurance calculators.

Some people think that a calculator is a great way to determine how much insurance they should buy. Others think that this is a “scam”, since there is no way an online tool would be able to tell them how much coverage they need.

Take the Results with a Grain of Salt

There is no denying that a life insurance calculator can spit out numbers based on your input. While it depends on the calculator you are using, here are some of the most common questions asked:

  • Do you have dependents?
  • How much life insurance do you currently have?
  • What is your net worth?
  • How old are you?
  • How much debt do you have?
  • What is your monthly mortgage payment?

By answering these questions, as well as others, the calculator is able to give you a basic idea of how much coverage you should buy.

As noted above, you should take the results with a grain of salt. Everybody is in a unique position. Your family and financial situation is not the same as any other person. For this reason, you will not read and react to the results the same as somebody else.

Are They Accurate?

This all depends on what you mean by the word “accurate.” If you are going to do exactly what a life insurance calculator suggests, you probably want to rethink your decision. Yes, this is a good place to start but you should not take the information and run with it until you do some further research.

A life insurance calculator likely won’t take into effect your monthly budget or how much you are willing to spend on a policy. For this reason, you may need to adjust your numbers as you move forward.

One thing you can do is compare the number received from a life insurance calculator to what your agent has suggested. This will give you two opinions instead of one. Combine this with the information you have gathered on your own and you will quickly be closing in on a final decision.

It is not fair to say that using a calculator is a bad idea. At the worst, this is a tool that will give you a basic idea of how much coverage to purchase.

For many consumers, using an online calculator is the first step to better understanding their options as well as the details that go into buying a policy.

This entry was posted in Life by Mike.