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Tools to Understand How Life Insurance is Calculated

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This article was last updated Oct 09, 2017, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

This month is dedicated to life insurance awareness and we are bringing you articles to help those new to life insurance, better understand the basics of the subject. With the web being an endless pool of information and resources, it’s difficult to determine who is a reliable source for information. The cost of life insurance is based on an individual basis and factors in three things; mortality, interest, and expense. The amount of risk you bring to your life is determined by mortality tables and your age group’s life expectancy. Interest earnings is used to calculate the premium, which is invested by the company in bonds, stocks, real estate, and more. The company assumes they will see a return on that investment. Expense loading is the amount charged to cover each policy’s share of expenses of operation. In simpler terms, it’s the amount added to the rate to cover expenses. Below, we will point you in the right direction to helpful tools and calculators.


  • Life Insurance Needs Calculator– This is one of the more in-depth calculators we found on figuring out the amount of life insurance you will need at the time of your death. It’s pretty self-explanatory and there are additional explanations throughout the questionnaire.
  • Life Expectancy Calculator– This takes into consideration things like heath habits, gender, sex, vitals, and family history. JAVA is required, so if you would like to avoid that, try this one instead, which is much more simplistic.
  • Life Value Calculator– No, this isn’t used to determine how valuable your life is. Instead, this is used to determine how much the value of your finances will be in the future. Things like inflation and the economy will cause this to fluctuate.
  • Net Worth Calculator– If you’re interested in the value of all your assets as of today, this calculator is for you. Basically, it just takes what you own, or assets, minus your debts.

Compare Life Insurance Companies

  • By Satisfaction & Reviews– Insure.com surveyed 5,600 insurance customers nationwide for customer satisfaction ratings and reviews collected from 20 large companies (by market share). The top winners for life insurance were American General, Jackson National and Allstate.
  • By Ratings in Categories– TopTenReviews.com ranked the top life insurance companies by four different categories, which equated to their overall rating. They were rated on policy benefits by variety and flexibility of policies, those that gave more lucrative term life insurance rates (pricing and premiums), additional services, and customer support. The top winners were MetLife, ING and State Farm Insurance.

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