Definitions

Current life insurance coverage

Total amount of life insurance coverage that you currently have.

Years for insurance income to last

Number of years your spouse will need to use the insurance proceeds to provide for living expenses and income.

Inflation rate

The expected average long-term inflation rate. A common measure of inflation is the Consumer Price Index (CPI), which typically has a long-term average of about 3.0% annually. The CPI for the 2009-10 financial year was 2.3%, as reported by the Bureau of Statistics. The total expenses are increased by this rate for each year you require income. The income received from this life insurance policy is used to cover any shortfalls between the expected income from all sources and your expenses.

Return on investments

The annual rate of return for your investments. The actual rate of return is largely dependent on the type of investments you select and the risk associated with that asset class. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances. Guaranteed Cash investments, which are low risk, will have a return of around 3.5% with little variation year to year. High risk investments based solely on domestic and international equities can return up to 20% in good times or lose up to 25% in market downturns.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment.

Income tax

This is your current income tax rate. Changing this rate only affects your interest income from your investments. All other income and expenses should be entered on an after tax basis.

Cash and savings

Total amount currently available in cash, cheque accounts, savings accounts or other current accounts that can be used to help cover expenses.

Home equity

Total amount of equity in your home that you are willing to use toward your living expenses. Only include the home equity that you consider available to use toward your living expenses. For example, the equity you would make available by selling your home and moving into a smaller one.

Investments

Total value of all investments that you are willing to use toward your living expenses.

Other

Any other assets that you may be willing to sell or liquidate.

Estate or inheritance taxes on assets

Taxes that are required to be paid on your assets at death.

Probate costs

Probate costs cover any legal fees for disbursing the assets of the deceased. You may incur significant probate costs, depending on your state of residence, even if you have a will.

Funeral costs

All costs required to cover the cost of the funeral.

Uninsured medical costs

Any medical costs that are not covered by medical insurance. Make sure to include any deductibles.

Debt repayment

Credit card debt, car loans, home equity loans, mortgages or other debt that you wish to repay. Providing the ability to repay these loans if you were to die can significantly help your family meet their monthly living expenses.

Other expenses

Any other items that you need to pay with your insurance proceeds.

College fund for children

Amounts you wish to provide your surviving children to cover future education expenses such as university fees.

Spouse income from work

Income expected from your spouse after your death. If your spouse needs education or retraining, make sure that the starting year for this income provides adequate time to complete.

Social security survivor benefits

Depending on your work history, your family may qualify for Social Security benefits. Typically, Social Security benefits for the widow/widower cease when the youngest child turns 16. The child's benefit generally continues to age 18. Once the children exceed this age any child benefit may cease. Social Security benefits are generally not available until the widow/widower reaches retirement age.

Living expenses with children at home

Total monthly expenses while your children are still living at home. This should include all monthly expenses except child care.

Living expenses with children gone

Total monthly expenses after your children have left home. This should include all monthly expenses.

Children's education expenses

Monthly expenses for your children's education expenses. If your children have not yet entered university, and have no other educational expenses, leave this amount at zero and enter an amount in the college fund entry fields in the total expenses at death section.

Retraining and education for spouse

Monthly expenses expected to cover any cost of education or retraining for your spouse to re-enter the workforce.

Other expenses

Any other monthly expenses not included above.

Savings balance

The amounts of funds available to your family after your expenses at death have been covered. This includes any current life insurance.