How to Calculate Your Life Insurance Needs - Black Enterprise
Black Enterprise Magazine September/October 2018 Issue

If anything were to happen to you, what would your family need financially to continue without you? Use the following calculation to figure out the amount of life insurance coverage that’s appropriate for you:

Estimate the number of years before your youngest dependent will no longer need financial support. If you have no dependents but your spouse does not work, you might also want your policy to cover him or her until they are eligible to collect social security at age 65.

Multiply your annual salary (before taxes) by the above number. First subtract costs that occur as a result of working (for example: transportation to and from the job).

Add your funeral expenses.

If you own a business, add the cost to find and hire an employee to replace your position. Consider arranging a Buy — Sell agreement, a legal document backed by insurance, which provides the funding needed for partners or stockholders to take over the business or buy back shares you willed to your beneficiaries.

Add your overall financial obligations including mortgage, debt, estate taxes, and taxes for the year of death. In addition, consider adding the cost of the monthly premiums for your spouse’s life insurance, to protect the children in case both parents die.

Add anticipated income needs for the future, such as college funding for each dependent, extra curricular activities like class trips, piano lessons, karate classes, or anything you would plan to purchase for your children if you were still alive.

If your spouse does not have their own, you will need to add in the cost of the yearly health and dental insurance premiums that were previously subsidized by your employer.

Add the financial value of services, such as lawn/house maintenance, tax preparation, child care, etc. that you provide for the household, which will need to be outsourced upon your death.

Add 3% each year for inflation.

Subtract your spouse’s salary multiplied by the number of years he/she plans to work after your death.

Subtract money in your retirement, savings, and pension accounts, and the benefit your family would receive from other insurance policies.

Subtract the money you expect your beneficiaries will receive from the Social Security Administration on your behalf. Visit to calculate an estimate of your Social Security death benefits.

Finally, subtract 6% for potential yields from investments.

Visit for more information on how to determine the right amount of coverage for your family.

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Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.