- 1,405
For almost 30 years I have been using this method to calculate the capital cost of replacing an income.
Income Replacement Calculator
The method tends to come up with much higher requirements for life insurance, by comparison to more traditional methods of insurance needs analysis. A lot of agents reject it for that reason; I strongly disagree.
I was just going over the new underwriting requirement booklet for one of the life insurance companies and came across this:
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Income Replacement Calculator
The method tends to come up with much higher requirements for life insurance, by comparison to more traditional methods of insurance needs analysis. A lot of agents reject it for that reason; I strongly disagree.
I was just going over the new underwriting requirement booklet for one of the life insurance companies and came across this:
FINANCIAL UNDERWRITING
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]The single most important consideration for financial underwriting of any size case is knowing how the sale was made. If the sale makes sense to the Agent, then it will probably make sense to the Underwriter. [/FONT][/FONT]
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]All of the information below is given only as a guideline. We depend heavily on the Agent to help us understand the purpose of the coverage. [/FONT]
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]The Writing Agent is a key source of information and usually the best source. Through the cover letter, he or she can provide an explanation of the method used to establish the requested face amount. The cover letter is also the perfect place to clarify any unusual aspects of the case. [/FONT]
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]If the case is complicated and other carriers are involved, the cover letter should clarify all coverage amounts in-force, applied for, and/or being replaced. [/FONT]
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]Copies of an estate planning analysis and available financial statements should accompany cases in which large amounts are requested or are already in-force. For business insurance, copies of an audited financial statement or even a less reliable, unaudited statement prepared by a CPA firm is of great help to the Underwriter. In some cases, these statements may be required depending upon the depth of the information the inspection company can develop. Certainly for very large amounts, a statement would be required. [/FONT]
[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]Third Party Financials will be required on face amounts of $5 million and up. [/FONT]
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[FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]Personal Insurance [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]Ages - [/FONT][/FONT][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]Income Multiples [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]18-30 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]30 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]31-35 - 2[/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]5 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]36-40 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]20 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]41-45 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]18 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]46-50 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]15 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]51-55 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]12 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]56-60 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]10 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]61-65 - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]8 [/FONT][/FONT]
[FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman][FONT=Frutiger LT Std 55 Roman,Frutiger LT Std 55 Roman]66 and over - [/FONT][/FONT][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn][FONT=Frutiger LT Std 47 Light Cn,Frutiger LT Std 47 Light Cn]6 [/FONT][/FONT]