The internet is a great source of information when trying to find out which life insurance policy best suits your needs. There are news articles, educational content, life insurance company websites, and life insurance comparison websites. However one particular tool which should be used with caution is the online life insurance calculator.
Life Insurance Calculator Types
There are a variety of different types of life insurance calculators found online, both U.S. and Australian based. These vary from simple and crude life insurance calculators, to more comprehensive life insurance calculator types.
The purpose of these online life insurance calculators is to help you identify how much life insurance coverage you need. Obviously finding the right amount will give you peace of mind knowing that your loved ones will have enough funds should you pass away.
Simple Life Insurance Calculators
A simple online life insurance calculator will usually calculate the sum you should be insured for by multiplying the income you earn by ten. As such, a simple online life insurance calculator will ask you to enter the following data:
• Your income
• Your age
Comprehensive Life Insurance Calculators
On the other hand, more comprehensive online life insurance calculators will usually try to calculate the gap between your needs and the amount of cover you may already have (if any).
These more comprehensive life insurance calculators will ask you to enter your age and income amount, as well as the following information:
• Outstanding mortgage and loans
• Living expenses
• The number of years you would like to cover your living expenses for
• How much life insurance you currently have
• The cash value of assets you would consider selling quickly to cover any costs in the event of your death
A Word of Warning on Life Insurance Calculators
While life insurance calculators will give you an approximate idea on the sum you should be insured for, online life insurance calculators should not be solely relied upon for the purposes of making a decision in relation to life insurance. This is because everyone’s situation is different, and as such the amount of life insurance needed will differ from person to person. Another negative factor is that these online life insurance calculators do not do is help you identify which type of life insurance policy is best for your situation, such as stepped or level life insurance policies.
You should consider obtaining advice from a financial adviser before making any financial decisions. A qualified financial adviser should be able to give you more accurate life insurance quotes, and can compare a number of policies from the top life insurance companies in Australia.
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