Insure Right Worksheet

This worksheet is meant to help you start thinking about your insurable need.

This worksheet calculates numbers based upon certain assumptions:

  • The Rate of Return you enter below (on investments) is the percentage over and above the Rate of Inflation (RoI). Therefore the investment will be something with a ROR > RoI (i.e. not a GIC, T-Bill/Bond nor bank account)
  • The gross annual income needed doesn’t change.
  • Because we are calculating ROR as net of inflation, we are not building inflation into any of the other numbers.
  • All debts will be paid off by the policy.
  • The annual income needed will be ongoing living expenses (This means things like groceries, utilities, etc – debt servicing zero’d by paying off debts.)
  • The Annual Income Need will be funded through Returns on investment (ROR) without drawing down the investment.
  • The value of all existing assets (Business, Investments, Property excluding Primary Residence) will not increase faster than the rate of Inflation, will not decrease, and will be drawn down to zero at such a rate that the value runs out just as the 2nd person reaches end of life. (Therefore remaining assets will be the investment from the policy providing the annual income need).

We will contact you after you have submitted the worksheet to discuss the results to help you tailor the resulting needs to your specific situation in case the assumptions built into the worksheet aren’t perfect for your situation.

    At the death of: We have the following:

    Years to Cover

    Remaining Life Expectancy of Spouse: Planned retirement years of Spouse: Working Years: [calculated work_years "life_expectancy - retired_years"]

    Assets

    Cash Assets Available: RRSP 1: RRSP 2: TFSA 1: TFSA 2: Stocks, Bonds and Mutual Funds (Outside TFSA/RRSP): Principal Residence: Real Estate: Business and/or farm assets: CPP Death Benefit: Existing Life Insurance: Other Assets (e.g. pension plan death benefits): Total Available: [calculator total_available "cash_available + rrsp1 + rrsp2 + tfsa1 + tfsa2 + stocks + real_estate + business_assets + cpp_death + existing_insurance + other_assets"]

    Liabilities and Cash Needs

    Mortgages Outstanding: Loans and Other Debts: Final Expenses (Burial, Probate, Lawyer): Final Taxes: Education Funding (x/yr * y years * z children) Child/Home Care (x/yr * y years * z people) Other Cash Needs (Emergency Fund, gifts, etc) Total Liabilities and Cash Needs: [calculator total_liabilities "mortgage_outstanding +loans_outstanding + final_expenses + final_taxes + Education_Funding + Care_Funding + Cash_Needs"]

    Replacement Income Needs

    Net (Take Home) Annual Income Needed by partner (Expenses, no debt servicing): Partner Net (Take Home) Annual Income: Annual CPP/QPP Survivor Benefit: See https://protect.ksfraser.ca/education-center/retirement-benefits/ Pension Plan Survivor Benefit: Partner Expected Pension Income (Retirement Years):

    Working Years Gap

    Income Available (Working years): [calculator gross_available "partner_gross_income + cpp_benefit + pension_survivor"] (Annual) Income Shortage (Working years): [calculator gross_shortage "gross_income_needed - gross_available"]

    Retired Years Gap

    Income Available (Retirement years): [calculator retired_available "partner_pension_income + cpp_benefit + pension_survivor"] (Annual) Income Shortage (Retirement years): [calculator retired_shortage "gross_income_needed - retired_available"]

    Total Money Needed

    Investment Returns approach

    Investment needed to cover Income gap: Assumed Rate of Return (over and above inflation)(i.e. 5% return 3% Inflation = 2%):

    Investment needed to provide the ROR

    If you are going to live off of only the dividends produced by the assumed ROR above, here is how much would need to be invested: Amount needed to provide return (Working Years): [calculator net_amount_needed "gross_shortage * 100 / assumed_ror "] Amount needed to provide return (Retirement Years): [calculator retired_amount_needed "retired_shortage * 100 / assumed_ror "]

    Based upon Working Years, Invest Approach

    Total Money Needed to pay off liabilities and replace income, based upon net difference in working years: [calculator total_money_required_working "net_amount_needed + total_liabilities"] You can think of this as the smallest gap you would have, based upon the assumptions built into this worksheet.

    Based upon Retired Years, Invest Approach

    Total Money Needed to pay off liabilities and replace income, based upon net difference in retirment years: [calculator total_money_required_retired "retired_amount_needed + total_liabilities"] You can think of this as the largest gap you would have, based upon the assumptions built into this worksheet.

    Based upon weighted Working and Retired Years, Invest Approach

    In this approach, you will have extra "income" from your dividends during your working years, but not quite enough during your retirement years. The approach would be to bank the excess during your working years in an investment that keeps up with inflation to suppliment the retired years. Total required during working years:[calculator weighted_money_required_work "gross_shortage * work_years"] Total required during retired years:[calculator weighted_money_required_retired "retired_shortage * retired_years"] Total required:[calculator weighted_money_required_total "weighted_money_required_retired + weighted_money_required_work"] Average annual requirement:[calculator weighted_money_required_annual "weighted_money_required_total / life_expectancy"] Amount needed Invested to provide return (weighted): [calculator weighted_amount_needed "weighted_money_required_annual * 100 / assumed_ror "] Total Money Needed to pay off liabilities and replace income: [calculator total_money_required_weighted "weighted_money_required_total + total_liabilities"] Total Money Needed to pay off liabilities and INVEST to replace income, based upon net difference in working years: [calculator total_money_required_weighted_Invested "weighted_amount_needed + total_liabilities"] You can think of this as the most likely gap you would have, based upon the assumptions built into this worksheet.

    Insurance Needs

    Investment Returns approach

    In this total, we consider liquidating all assets (except Primary Residence) as part of the funds available. Working Years: [calculator insurance_need_working "total_money_required_working - total_available"] Retirement Years: [calculator insurance_need_retirement "total_money_required_retired - total_available"] Weighted Years: [calculator insurance_need_weighted "weighted_amount_needed - total_available"]

    Investment Returns approach No Drawdown

    In this total, we don't include revenue from selling neither real estate nor business assets. Working Years: [calculator insurance_need_working_no "total_money_required_working - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"] Retirement Years: [calculator insurance_need_retirement_no "total_money_required_retired - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"] Weighted Years: [calculator insurance_need_weighted_no "weighted_amount_needed - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"]

    Lump Sum not invested

    In this scenario, you take a lump sum, invest it in laddered GICs to earn just enough to cover inflation, and use the GICs as each comes due to cover living expenses. Working Years: [calculator insurance_need_working_lump "gross_shortage * life_expectancy + total_liabilities - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"] Retirement Years: [calculator insurance_need_retirement_lump "retired_shortage * life_expectancy - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"] Weighted Years: [calculator insurance_need_weighted_lump "total_money_required_weighted - cash_available - rrsp1 - rrsp2 - tfsa1 - tfsa2 - stocks - cpp_death - existing_insurance"]