How much is your life worth?

      The difference between the present value of your projected expenses and your current financial resources is the amount of life cover you need today.

    The reason you have to consider present value of your projected expenses, not the actual unadjusted value, is that your family won't expend all their financial resources at one shot, but periodically.So while they draw from it periodically, the balance remains invested and continues to grow.  Adjust the total projected expenses for this incremental return by calculating its present value.

Expenses

• Day to day maintenance expenses of family, excluding expenses towards self.  These should include essentials such as rent if not own a house, food, clothing, utility bills, children's education, travel and entertainment. Calculate an annual figure, increasing it by 5% every year to factor in inflation.  Do this calculation for the number of years you feel it will be before your dependants are in a position to meet these expenses with their own income.
• Outstanding principal on loans taken.
• Big ticket expenses relating to children, like higher education and, possibly, marriage. 
• Emergency expenses

Resources

• The current value of all your investments--what you would get if you encashed your holdings today.  In this calculation, don't include assets whose liquidation might alter your family lifestyle--eg: the house in which you an your family stay.
• Death benefits (pension and gratuity) your family will receive from your employer if your were to die today.