How much life insurance or life assurance you need depends largely on your personnel circumstances, for example whether you’ve got a mortgage or children. Here we look at some of the factors you need to consider.
The amount of life insurance cover you need depends on the needs of your dependants. It also depends on how much you can afford to pay out each month. Here are the main items you buy coverage for:
Cover your mortgage payments
Your mortgage repayment is normally your biggest outgoing. If you are the main source of income for your family, your loved ones will not be able to easily take responsibility for it should you die.
You may have already made some provision for it to be repaid in the event of your death. Some lenders may have requested some form of life security on the loan in any case. But, now is the time to double check that you have enough cover. You need to make sure that your existing policy covers capital as well as interest repayments on the mortgage.
Coverage for all other loans
Most of us have other loans, credit card debts and car loans. Once again, you need to ensure that these debts are covered in the event of your death.
These two are obvious, but the elements covered below are less so.
Education and childcare expenses
Should something happen to you it is important that your child’s life continues as near as possible the same way. If they are currently in private education, you will want that education to continue. For your child being able to stay in the same school and close to their friends will make a huge difference to them as well as the quality of their education.
If you want your family to continue to enjoy a similar quality of life after you are gone it is important that your policy provide them with some form of income. Your partner will eventually be able to find work, but it is hard to do immediately after the death of your life partner.
Income replacement protection will give your partner the breathing space they need to find a job or re-educate themselves. It buys them time to get over their grief and adjust to having to look after the family on their own.
Critical illness coverage
Given the fact that close to 40% of us will at some point end up suffering from cancer or another serious illness critical illness coverage is well worth having. This kind of coverage pays out some of the policy amount should you be diagnosed with a terminal illness.
Having access to this money can help you to cover the additional costs of transport to and from the hospital and other additional practical expenses. It also gives you the chance to enjoy quality time with your family perhaps a last dream holiday.