Fiscal Agents Financial Tools
Life Insurance Protection Worksheet
How much is enough?

This three-part worksheet will help you figure out how much Life insurance will be needed at death.
Part 1 - Liabilities and Cash Needs Insurance
First Applicant

Second Applicant
How much is owing on the mortgage(s)?

How much do you owe in other loans and debts?

How much will the final expenses be (burial, taxes, probate lawyer fees etc.)?

How much money is needed to finish children's education?
(multiply the yearly expense by the remaining years of education for each child.)
E.g. 7,000 x 4 years x 2 children=$56,000

Do you have dependents that require special care?
If so, how much and for how long (use the same method as above)?

Do you have any other cash needs (bequests, emergency fund, etc.)?

Total liabilities and cash needs

Part 2 - Amount of money needed to provide income
Total annual income needed by family/partner
Partner's annual employment income
Annual CPP/QPP survivor/orphan income benefits
Gross annual income available
Annual income shortage/surplus
Assumed rate of return (adjust for inflation, if desired)
Amount of money needed to meet income shortage
Total amount of money required
Part 3 - Assets (usable by family / partner)
Your cash assets (savings, GICs, saving bonds etc.)
Retirement savings plans $ that would be considered a rollover
Mutual funds, stocks and bonds
How much is the principal worth
Other real estate
Total life insurance (group, personal, mortgage and/or credit)
Business/ farm assets
CPP/QPP death benefit
Other assets (e.g. pension plan death benefit)
Total amount available
Totals
Total Assets
Total Liabilities
Surplus / Shortfall


Single Income Family Income Objectives

Based on a Government Study *, the following are typical objectives in order to permit a family to "maintain their standard of living" after the death of an income earner. Assumption is that the mortgage an residence is paid or that rent has been established and that education expenses are provided for separately.

A government study has found that two-income households outspend their one-earner counterparts. Therefore, if both spouses are presently working, 70% of their Total Gross Income should be provided regardless of Income Level.
Annual Gross Income
% of Gross
Income Required
up to $44,000
70%
$44,001 - $49,000
66%
$49,001 - $54,000
63%
$54,001 - $60,000
60%
Over $60,000
57%
* Source: 1960 bureau of Labor Statistic Consumer Expenditures Survey Updated with Bureau of labor Statistic Price Index through August 1995, and converted to Canadian dollar values using Statistics Canada purchasing power parity data (1994).



Income Objective Table
Money required to provide levels of annual/monthly income at various interest rates ( simple interest)


Annual
Income $
Monthly
Income $
4% 6% 8% 10%
12,000 1,000 300,000 200,000 150,000 120,000
15,000 1,250 375,000 250,000 187,000 150,000
18,000 1,500 450,000 300,000 225,000 180,000
21,000 1,750 525,000 350,000 262,500 210,000
24,000 2,000 600,000 400,000 300,000 240,000
27,000 2,250 675,000 450,000 337,500 270,000
30,000 2,500 750,000 500,000 375,000 300,000
33,000 2,275 825,000 550,000 412,500 330,000
36,000 3,000 900,000 600,000 450,000 360,000
39,000 3,250 975,000 650,000 486,500 390,000
42,000 3,500 1,050,000 700,000 487,500 420,000
45,000 3,750 1,125,000 750,000 525,000 450,000
48,000 4,000 1,200,000 800,000 562,500 480,000
51,000 4,250 1,250,000 850,000 600,000 510,000
54,000 4,500 1,350,000 900,000 637,500 540,000
57,000 4,750 1,425,000 950,000 712,500 570,000
60,000 5,000 1,500,000 1,000,000 750,000 600,000
Note: The lower interest rates are used if a person wishes to include an offset for inflation: e.g. 8% interest, 4% use 4% interest rate.