Survivor Income Objectives: Quick Assessment

• This page calculates your clients' additional life insurance needs in a clear, concise way.
  • First, NaviPlan totals the data in the Lump Sum Needs and Ongoing Needs sections.
  • Next, the total from the Available Assets to Offset Needs section is deducted.
  • Finally, the total recommended additional insurance is displayed (along with a summary of the calculation) in the Results section.
• This method makes the calculation easy to understand, increasing your clients' confidence.

• Life insurance analysis can be based on either a goal and expense analysis method or an income coverage analysis method.
• The Goal and Expense Analysis method analyzes the amount of insurance needed to maintain the survivor’s standard of living. NaviPlan calculates an insurance recommendation that accounts for the goals and expenses defined in the plan. The parameters of the goal and expense analysis can be changed to cover the survivor’s needs.
• The Income Coverage Analysis method analyzes the survivor’s income, the lost income due to death, and any lump-sum needs or expenses that would occur as a result of the client’s death. NaviPlan calculates a recommended amount of insurance to replace the lost income and to cover any additional lump-sum needs that are defined.
  • Note: The Income Coverage Analysis method is designed to be used as a standalone survivor income analysis and assumes the Estate Planning defaults of a Simple Will and ignores estate strategies because data entered for the survivor income analysis does not require the entry of other plan data.
• The Quick Assessment calculates your clients' additional insurance needs on the basis of a simple comparison of their lump sum and ongoing needs to their assets available to offset those needs. This assessment is designed to quickly assess your clients' need and provide you with an accurate amount of additional life insurance they will require.

• This page is designed to help you increase your clients' understanding of their needs, it is not meant for a holistic cash flow based plan.
• Have I entered all needs and assets into the calculation?
  • Are my clients underestimating their ongoing needs?
  • Is the list of available assets complete?
• The calculation presented on this page is not iterative—that is—it calculates your clients' need in a single pass without consideration given to other factors. This means elements such as deficit coverage order and additional insurance added on the Insurance Coverage page are ignored for purposes of this calculation.
• The grey fields are uneditable by default and pull in data from elsewhere in the plan.
  Note: If you feel that the values in these fields are inappropriate for purposes of this analysis, you can select the appropriate Override option and enter custom data into the field.

1. Select the survivorship situation

• Select <client/co-client/both> Objectives for your desired survivorship situation.
• Make sure the If <client/co-client/both> dies option is selected
• From the Objectives container, select Quick Assessment.

2. Enter Lump Sum Needs

• Enter all Lump Sum Needs your clients will need to pay off in the selected survivorship situation.
  Note: Mortgage Principal, All Other Loans, and Education Goals are calculated by NaviPlan based on data collected elsewhere in the plan. To manually enter data for these fields, select Lump Sum Needs Override.

3. Enter Ongoing Needs

• Enter all Ongoing Needs your client will need to pay in the selected survivorship situation.
  • The default entry in this section is based on data entered elsewhere in the plan and is meant to show the amount of annual income necessary to replace the decedent's income.
    Note: To modify these assumptions, select and modify any of the assumptions in the Ongoing Needs dialog box.
  • You can also specify how much of the decedent's income is necessary to replace for different time periods:
    1. From the Ongoing Needs section, enter an ongoing need and a number of years for the first row. This comprises the first period.
    2. Click Add Ongoing Need.
    3. Enter an annual ongoing need and a number of years for the newly created row. This comprises the second period and immediately follows the previous period.
    4. Repeat step 3 until you are satisfied.

4. Enter Available Assets

• The assets in this section represent the total assets available to cover needs in the selected survivorship situation.
• These assets are divided into two categories:
  • Realizable Assets: This field represents the value of assets that are easily converted to cash in the event of a death.
  • Existing Life Insurance Policies: This field represents the value of existing life insurance policies already entered in the plan.
• The value of these assets is calculated by NaviPlan; to modify these values select Available Asset Override and enter new data.

5. Edit Assumptions

• Use this section to view and edit assumptions. To change the value of any of these assumptions, enter new values.

6. View Results

• The Results section displays a summary of the calculation. This section displays the total for each section on this page as well as the final recommendation for additional life insurance.

• Use this button to copy the data you have entered in the Lump Sum Needs or Available Assets to Offset Needs sections to the relevant fields on the other client's tab.

• The Ongoing Needs dialog box is designed to help you quickly and accurately determine the survivor(s)' ongoing need.
• Each section of the dialog box represents a single consideration in determining this need.
  • Income that would be lost if <decedent> dies: This section determines how much income will be lost in the event of a survivorship situation.
  • PLUS: new expenses if <decedent> dies: This section calculates any additional expenses incurred in the event of the decedent's death. These costs can come from many sources; the fields provided give some common examples and an Other field is included for any expenses that fit none of the provided categories.
  • MINUS: extra income available if <client> dies: This section is meant to capture any extra income in the event of the decedent's death (e.g. Social Security benefits).