Calculating Life Insurance Need. Review the material in How Much Life Insurance Do You Need? on pages 351354. Then using dollar amounts that fit your personal situation, complete Worksheet 48: Determining My Life Insurance Needs from My Personal Financial Planner. If you are currently single and childless, for the purposes of this activity, assume that you are 30 years old, have two children under age 5, are married, and earn $60,000 per year and redo the estimate of need. How would having a family change your need for life insurance?

1. Income-replacement needs*

$823,219

2. Final-expense needs

$ 12,000

3. Readjustment-period needs

$ 19,000

4. Debt-repayment needs

$ 10,000

5. College-expense needs

$ 75,000

6. Other special needs

$ -

7. Subtotal (combined effects of items 16)

$ 939,219

8. Government benefits**

$390,370

9. Investment Assets Available

$0

10. Current Life Insurance In Place

$ 98,000

11. Life insurance needed

$ 450,848

*Income Replacement Needs Calculator

Current Annual Income

$56,000

Percent of Annual Income To Be Replaced

75%

Annuity Amount (% desired of annual income)

$42,000

i (assumed interest rate

3.00%

n (number of annuity payments)

30

PV (present value) of Income Replacement Needs

$823,219

**Present Value of Social Security Benefits Calculator

Estimated Monthly Benefit (See Appendix B in Text)

$2,725.00

Estimated Annual Benefit

$32,700

i (assumed interest rate

3.00%

n (number of annuity payments)

15

PV (present value) of Government Benefits

$390,370