The life insurance amounts are calculated for each year—this is why the amounts change each year. These amounts are not estimates based on a rule of thumb, but amounts calculated to provide the survivor with an equivalent per-adult living standard. The assumption we make is that two can live as cheaply as 1.6 and that the survivor does not need the full household discretionary spending amount to have the same living standard. After all, in the event of a death, there will be one less mouth to feed and the same living standard can be afforded with less spending.
The life insurance amounts vary through time as the needs of survivors change and as your household accumulates more regular and retirement account assets to cover the needs of survivors. These calculations for insurance do take account of contingency planning available in the Premium and Professional version, which may even eliminate the need for term insurance. For example, a survivor might downsize an expensive home or return to work, sell a piece of property or eliminate certain future special expenditures. These decisions would provide cash or a stream of income that could eliminate the need for a cash payment from the insurance company.
Where children are concerned, in the year after the last parent dies, the children receive the assets, retirement assets, social security insurance (PIA). MaxiFi evaluates scenarios where parent(s) die before their children have left home, which would leave the children orphaned. MaxiFi looks at the kids SS insurance income along with asset income in each of the possible combinations of years when the parents could die before the children have left home. The result is that MaxiFi can calculate the life insurance required to support the children after the parents have died.