Military Education Department
Personal Financial Management (PFM)

The purpose of life insurance is to replace your income should you die. It ensures that your family will be able to continue living as it does now. To determine how much life insurance you need, you must determine how much money your family will need in your absence over the course of many years.

The following calculator helps you to determine the total amount of life insurance that you will need. You should rerun this calculation each time you have a child or your life changes significantly.

Expenses
Living expenses - Using the Cash Flow Calculator determine how much money your family will need per month to live life as it does now. Adjust this number up or down to account for things such as diminished expenses in your absense, additional child care expenses in your absence, health care coverage that will dissappear should you die, etc.
Funeral expenses - Funeral and other expenses run between $4,000 and $10,000.
Estate administration expenses - Your spouse will be charged perhaps 5% of your family's asset value to handle the estate. Use theNet Worth Calculator to determine your asset value (not the net worth - the asset value). Multiply by 5% to determine administration expenses.
Taxes - If your net assets total more tha $600,000, your spouse will have to pay perhaps 40% in taxes on it. You will want to see an estate lawyer to ameliorate this expense, but account for it here.
Mortgage and other loan payoffs - It would make life much easier for your family if all loans were erased.
College expenses - If you plan to send your children to college, enter $25,000 for each child for state college or $75,000 per child for private college. Be sure to multiply by the number of children.
Other expenses - Enter any other expenses you may wish to cover, such as emergencies, cars for the kids, etc., in today's dollars.
Income
Spouse's Income - Enter your spouse's annual income after taxes. You may want for your spouse to be able to stop working in the event of your death, and if that is the case enter zero here.
Social Security Income - Enter the amount of money your spouse will receive from Social Security. Social security benefits are paid immediately if you have children under age 18 and they remain in school. You may call the social security administration to get an exact reading based on your contributions and number of children. If you have children and want to enter a rough but fairly accurate number use $20,000. If you do not have children enter 0.
Other Income - Enter the total annual income your spouse will receive from any other sources.
Other Information
Years of social security - Enter the number of years until your youngest child reaches age 18. If you have no children enter 0 here.
Spouse's age - Enter your spouse's age.
Existing Life Insurance - Enter the value of any existing life insurance policies you have.
Click this button to calculate the total amount of life insurance you need.
Total Life Insurance - This is the total amount of life insurance you need.
Click this button to calculate a new value

If the Total Life Insurance figure is negative, then you do not need additional life insurance. Otherwise purchase the amount of insurance indicated.

This calculator makes several assumptions and it will be helpful if you understand them:

It is assumed that all life insurance money will be deposited in ultra-safe investments such as CDs should you die. This is generally the case. It is assumed that CD rates of return, after taking taxes and inflation into account, are zero.
Your current assets such as retirement accounts, home equity, etc. are not considered in order to simplify the calculation. A financial planner or estate lawyer would be a good person to talk to if you have significant assets.
It is assumed that your spouse has no outside retirement savings, will retire at age 65 and will live to age 95. During retirement, your spouse's living expenses are assumed to be 80% of the expenses entered in the Living Expenses field.
"Spousal income" and "Other income" are assumed to end at age 65.

Note: These calculations are estimates and are only provided to give you some general guidelines , although we believe the calculations to be correct, we do not guarantee the results. For more information or assistance with your personal finances, Please consult your financial advisor or lending institution before making any final financial decisions.

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Counseling

If you have questions or need assistance after graduating from the SDCC Military PFM course contact one of the counselors listed below:

Army - E-mail

Anthony Powell – Ft. Bliss, TX
Wk Ph: 915-568-4453,
DSN: 978-4453
Email: anthony.powell1@us.army.mil

Navy - E-mail

Mike Kempf – Pensacola, FL
Wk Ph: 850-452-6817,
DSN: 922-3228
Email: mikekempf@bellsouth.net

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General Information

SDCC has articulated the Navy PFM course for one college credit. Navy personnel who have graduated from the Navy PFM course qualify. Typically, it can be difficult to apply one credit and meet the requirements of a three credit semester long course at most colleges and universities. With that in mind, we have taken the initiative of developing a two credit online course that will be available upon completion of the Navy PFM course. Sailors who have completed the requirements of both the Navy PFM course and the online PFM course will be given credit for completing the three credit Consumer Studies 110 course offered by San Diego City College and Mesa College and transferable to any Servicemembers Opportunity College (SOC).

For additional information or to see if you qualify contact a PFM counselor.

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Military Education Department Personal Financial Management (PFM)

PFM Contact Information Darrell Himmelspach dhimmels@sdccd.edu Phone: 847-746-2790 Fax: 847-746-2791

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