Raymond wants to be sure that his life insurance policy will provide enough to take care of his wife and their four (4) kids. Raymond is 35 years old and sole provider in the family. He is currently earning an annual income of RM75,000. After looking at their budget, their monthly living expenses would be about RM3,000 while the children are still at home. When all have graduated, which is 18 years from now, Sara (age, 34) will need RM2,500 as monthly income, up until retirement, which is 65 years old. At that point, Raymond estimates that Sara's living expenses would fall to RM2000 a month. 

The life expectancy of a woman Sara's age is 87 years. They are worried that her previous education may be outdated, so they included RM25,000 for Sara to further her studies. Wanting to fund their children's education, they decided to establish a college fund of RM75,000 for this purpose. Raymond and Sara also estimated the final expenses of funeral cost and estate taxes of RM12,000. 

They now have an outstanding debt on housing loan, with a current balance of RM130,000, a car loan of RM5,000 and miscellaneous charge account of RM2,000, therefore estimated that RM137,000 would pay off all their existing debts. In the 18 years between the time the children leave home and Sara retires, they expect Sara to be employed full time and earn about RM35,000 after taxes. After Sara turns 65, she would receive approximately RM2,250 a month from her own security benefit and her own retirement benefit. However, Sara will have some other resources available if Raymond die. The couple saved RM263,000 in a mutual fund, and Raymond's employer provides a RM170,000 life insurance policy for him. 

Required: 

How much life insurance should they buy for Raymond in order to be sure that Sara and the children would be adequately cared for?

What are the ways they calculate the right amount of insurance?