How much term life insurance should you have to provide your family with $75,000 per year pretax for general expenses for 40 years, plus immediately pre-fund two $100,000 college accounts for your two children in the event of your death. Assume your death benefit could be invested at 6% per year for the entire period.

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To calculate the required term life insurance, we need to consider both the immediate need for $200,000 to pre-fund the college accounts and the future need of providing $75,000 per year for 40 years. The future need can be calculated using the formula for the present value of an annuity: $PV = P \times \frac{1 - (1 + r)^{-n}}{r}$, where $P$ is the annual payment ($75,000), $r$ is the annual interest rate (6%, or 0.06), and $n$ is the number of periods (40 years). Plugging in the values, we get:$$PV = 75,000 \times \frac{1 - (1 + 0.06)^{-40}}{0.06} \approx 1,128,472$$Adding the immediate need for the college funds ($200,000) to this amount gives us:$$1,128,472 + 200,000 = 1,328,472$$Therefore, to provide $75,000 per year for 40 years at a 6% investment return, plus $200,000 immediately for college funds, you would need approximately $1,328,472 in term life insurance.

How Much Term Life Insurance Should You Have to Provide