How much life insurance cover do I need?

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Your life insurance cover needs to be big enough to pay of your debt and to leave the right amount of financial support for those that you leave behind, here are 6 things to think about when working out how much cover you need.

1.      Mortgage

If you have a mortgage, how much do you still owe? Find out by looking at your most recent mortgage statement to find out the outstanding balance. 

2.      Rent

If you’re renting your home, think about how the rent will be paid if you’re not around. You should also think about the rent due over the period of time you expect your family to live at the address, budgeting for rent increases.

3.      Debts

Think about what you owe on personal loans or credit or store cards. Your policy should be sufficient to wipe these slates clean.

4.      Children

Think about how much each child might need to make sure they're looked after until they are financially independent. This could include childcare costs, clothes and other expenses, such as holidays and perhaps university fees.

5.      How much would you like to leave as a lump sum?

Think about anything else that would need to be dealt with if you died. This could include funeral expenses or other financial commitments. You would also need to leave a cash sum for your dependents to use for everyday living expenses, well into the future.

6.      How much other life cover do you have?

If you have other life cover in place, you can cut down how much life insurance you need. Your employer may offer 'death in service' cover which pays out if you die. You should remove this figure from your running total, then you’ll arrive at an estimate for the amount of cover you might need.

 

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