Calculating Your Family's Life Insurance Need
One of the most common questions we hear is: "How much life insurance do I need?" The answer is different for every family, but there are some key factors to consider.
What to Include in Your Calculation
1. Mortgage Balance
If you have a mortgage, you'll want enough cover to repay it in full. This ensures your family can stay in the family home without worrying about monthly repayments.
2. Outstanding Debts
Include any loans, credit cards, car finance or other debts that would need to be repaid.
3. Income Replacement
Consider how many years of income your family would need to maintain their standard of living. Multiply your annual income by the number of years you want to provide for.
4. Future Costs
Think about school fees, university costs, childcare and any other significant expenses your family would face.
5. Funeral Costs
The average cost of a funeral in the UK is around £4,000-£6,000, but this can vary significantly.
6. Existing Cover
Deduct any existing life insurance, death-in-service benefits or savings that would be available.
A Simple Formula
Life insurance need = Mortgage + Debts + (Annual income x Years needed) + Future costs + Funeral costs - Existing cover
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