How much should I insure my life for?
Femi, Greater London
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Deciding what you are worth may feel a little weird, but it is an important calculation when buying life insurance. It determines how much your family should get if you die, which in turn, will affect how much life insurance you need to buy.
There are some key things to think about: One of the major impacts will be on your mortgage. If you and your spouse hold the property as joint tenants, the survivor will automatically get it, mortgage n’all. One of the main uses for a life insurance policy is to ensure some or all of this is paid off it you die. If you are the main breadwinner, you will also need to ensure that you can replace your salary. While you may have some death-in-service benefit from your company, it may only be two or three times your salary, which may not be enough to support your family long-term.
Even if you are not the main breadwinner, do not underestimate the cost of providing childcare. If you are a stay-at-home carer, your spouse would need to use childcare if they planned to continue working full time.
Finally check your contract at work as it may well have some basic life cover in place for you already.
In practice, many online life insurance comparison sites have calculators to help you determine how much you are likely to need. They should also help you decided which type of life insurance is right for you. These are:
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