To use a pension calculator, enter the required data into the fields to get a sense of the present value of your pension over time, according to Bankrate. This helps you determine how much life insurance you need to have on hand for your spouse or other dependents if you die sooner than expected.
Enter your current age, expected retirement age and life expectancy, and enter the same information for your spouse, if you are married. Enter what your pension is supposed to pay you at retirement, and then enter the rate of return that the pension fund earns on its investments, as well as the insurance cost per thousand dollars in payout. If you want to index for cost of living allowance, or COLA, adjustments, do that as well, and press Calculate to get an analysis, states Bankrate.
Review the graph that appears at the end of your calculation. The lines may indicate what it costs to maintain a joint survivor benefit on your pension as well as the monthly cost of life insurance premiums. You should also see how much you need to have coming in as a lump sum if you die before your life expectancy, so that your family has access to the same level of funding, relates Bankrate.