How would your partner or children cope financially after your death? It’s a sobering thought.

Without your income, paying for food shopping, utility bills, children’s needs mortgage and loan repayments may become difficult or impossible.

What is Life Insurance?

In its most simplistic form life insurance pays out a set amount should the policy holder suffer loss of their life within the term of the life insurance policy. This money is typically paid directly to your dependents if the policy has been written in trust and named beneficiaries. Alternatively, the payout will form part of the deceased estate and will be used to pay any creditors before being divided between heirs of that estate and subject to inheritance tax.

Strictly speaking life ‘insurance’ is actually ‘assurance’ because insurance covers something at risk of happening but end of life is a certainty.
How much cover do you need?

There is no formula for calculating how much cover an individual might need and of course the higher the payout you require, the more it will cost to buy insurance. Thus you may need to find a balance between the amount of cover you need and what you can afford to pay for it.

Considering any outstanding debts is a good starting point. Mortgages and loans will still need to be repaid and life insurance should at least cover these debts.
Next consider covering a reasonable standard of living of any dependents you may have. What proportion of everyday expenses could be paid for by your partner’s income? Or, would your partner need to leave employment to provide care for your children? Or are your children older and able to support themselves financially now or in the near future?

To get the best life insurance check the provider’s terms and conditions for what is and is not covered and remember that cost is calculated on a number of factors including health and lifestyle choices.