Determining How Much Supplemental Life Insurance You Need
Some worksheets to help you decide, which are not financial advice.

Now that the Trust offers portability of supplemental life insurance, it's even more critical to assess your needs while you can take advantage of this benefit. The insurance you elect now could protect your family during your retirement, or until you find other employment.

To determine your needs, now, and for the future, the best place to start is by knowing your finances. Do you have a yearly budget? If not, complete the worksheet below to develop a sense of your financial picture, and your related life insurance need. Life insurance is a unique benefit, and one that requires you to think about this otherwise unspoken topic.

You will want to print out this worksheet twice, and the second time you complete it, calculate how much the numbers will change, if at all, when you leave State service (whether for retirement or by layoff).

HELP WITH THE WORKSHEET ABOVE

STEP 1: Your monthly living expenses. Please fill in the number on the worksheet above. Worksheet 1 will help you compare your income and planned expenses before and after your income is reduced. Completing this worksheet should help you see what what you can afford for a premium, and what would be needed to protect your family when you die. Worksheet 2 will help you fill in worksheet 1 by listing your seasonal income/expenses. You can skip these worksheets if you already know how much you need to supply for your family's living expenses.

STEP 2: Enter the living expenses that will not continue beyond your death. Examples of these expenses are your share of the clothing, food, healthcare and entertainment costs.

STEP 3: Do the math. Subtract Line 2 from Line 1 and enter the difference here.

STEP 4: Enter the new expenses that your survivor will incur following your death. These costs might include child care necessary for your survivor to work, job training or education for your survivor, or additional dollars toward medical premiums that your spouse will have to pay after losing your State-provided health care. Do not include funeral expenses.

STEP 5: Do the math. Add Line 4 to Line 3 and enter the total here.

STEP 6: Calculate how long to provide for your family's living expenses. This multiplier is really up to you, but if you're unsure, estimate for at least a year (12 months). Allow your survivor time to readjust and to find a job. Do the math in this step as well (by multiplying Line 5 by whatever number of months you determine) and enter the amount you determine.

STEP 7: Look at your family's long-term plans
Once you have a sense of your family's immediate needs, you can plan for the future. Do you want to provide a college fund for your children or grandchildren? How much will it take to pay off your mortgage? Take a look at Worksheet 3 for some suggestions, and then fill in the total of the funds you'd like to leave for your survivors, beyond debt reduction. Remember to adjust the living expenses by any related debts that will be paid in full; for example, if your mortgage is paid off, you may should subtract out the housing costs from your monthly expenses in line 1.

STEP 8: Do the math. Add Line 7 to Line 6 and enter the total here.

STEP 9: Burial expenses
Another necessary figure as you contemplate how much coverage your family will need. If you are unsure as to amount, $7,000-$10,000 is an average range, however, it is certainly possible to exceed this figure. Use an amount that suits your tastes and religious requirements.

STEP 10: Do the math. This may be the total amount of life insurance coverage you need to protect your family. Add Line 9 to Line 8 and enter the total here.

To simplify this exercise, we have not included payments your survivors may receive from retirement plans, nor have we included taxes on estates. Talk to a financial adviser if you would like additional assistance.

After completing the table, you should have a sense of how much life insurance you need, and how much you have from other sources. The next step is to consider how much is available to you from life insurance benefits. If you die while actively employed and are eligible, you will receive basic life insurance, supplemental life insurance if you've enrolled, and possibly accidental death insurance. Have you purchased any life insurance that the Trust doesn't sponsor? Will that continue after you leave State employment? Another life insurance worksheet will help you tally the life insurance benefits available to you, and should give you a guideline as to how much you need to purchase for your family's financial protection. You may not need to purchase any coverage.

Remember, if you do wish to enroll in supplemental life insurance coverage from the Trust, you must enroll during open enrollment or at hire.

You may wish to contact Working Solutions, a free service to you from the Trust, for further guidance in considering all of the budgeting needs you may face. While a helpful guide, these worksheets are not intended to take the place of consulting a financial adviser.

Your life insurance is available to you through the Union-led Benefits Trust.