Find out how much a £100,000 life insurance policy could…
How much life insurance you need will depend on your personal circumstances, such as whether you have dependents, a mortgage and/or any savings.
One common rule of thumb is that your life insurance cover amount (sum assured) should be 10 times the salary of the highest earner in the household.
This is so your loved ones can maintain their current standard of living, without having to make cutbacks at an already challenging time.
Life insurance can provide a reassuring financial safety net for your loved ones if the worst were to happen to you.
In this guide we’ll cover commonly asked questions which could help you determine how much life insurance you require, such as:
Keep reading to find out how much life insurance you might need, plus other frequently asked questions and top tips.
Reassured can help you compare life insurance quotes from some of the UK’s best life insurance providers.
We’re experienced, award-winning and don’t charge a fee for our quotes. Best of all, life insurance through us starts from just 20p-a-day † .
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Calculating how much life insurance you need can be as simple as adding up the sum of what you’d like to protect, for example:
Remaining mortgage balance + cost of raising your child until the age of 18 + funeral costs = required sum assured.
Fortunately, there are now many handy tools out there which can help you add together your key costs, like our life insurance calculator below:
Most people are likely to benefit from having some form of financial protection in place, particularly if you have anyone who will be financially affected by your passing.
There are some key questions you can ask yourself to establish whether life cover is the right option for you:
1. Do you have anyone who depends on you?
Whether you have children, a partner or an older relative who rely on your income, your passing will have a significant impact (not just emotionally, but financially).
A pay out from life insurance could allow them to continue with their current lifestyle when you’re no longer around.
2. Do you have any other forms of cover in place?
Maybe you have death in service benefit, which will pay out a lump sum (usually a multiple of your salary) to your loved ones if you pass away while in employment.
This is a generous benefit to receive from your employer and could help to reduce the amount of personal cover you need.
It’s unlikely that death in service alone could cover everything for your loved ones and, if you leave employment, you’ll no longer benefit.
A combination of death in service and personal cover can help to provide a comprehensive solution.
3. Do you have savings?
Some people choose to put money into a savings account for loved ones to use if the worst were to happen.
If you don’t have savings, life insurance can allow you to provide your loved ones with a lump sum pay out, if you pass away during the term, without the need to put away large sums of money.
Even if you have savings, it could take a significant period to save all the necessary funds and these funds would likely be subject to 40% inheritance tax after forming part of your estate.
Speaking to an expert can allow you to establish whether life insurance is the right option for you.
At Reassured, we can talk through your needs and provide you with all the information you need to make a fully informed decision.
Our quotes are fee-free and without obligation so why not get in touch?
Depending on your personal circumstances, your life insurance could cover all of these obligations, or just some of them.
Ultimately it will be up to you and what you’d like to protect for your loved ones.
Get in touch with Reassured today to find the right life insurance cover to suit your personal circumstances.
How much term life insurance you need will depend on what you want your policy to cover.
You have the option to choose between:
Level term life insurance - Which provides a fixed pay out if you pass away during the term.
Decreasing term life insurance - Which provides a pay out that reduces over the policy lifetime.
Term life insurance is often used to help cover expenses such as a mortgage, other debts and/or family living costs.
Therefore, the amount of cover you need will likely depend on your remaining mortgage balance and how long your children have left until financial independence.
How much mortgage life insurance you need will depend on your remaining mortgage balance and term.
Mortgage life insurance is actually a decreasing term life insurance policy which is taken out to help protect a mortgage.
Decreasing term life insurance is an ideal choice for helping protect a mortgage.
Your sum assured can reduce in line with your remaining mortgage balance and you can select a term which aligns with your mortgage term.
By doing this you could leave adequate funds for your loved ones to remain in the family home should anything happen to you.
As with other forms of cover, how much whole of life insurance you need will depend on what you’d like to protect.
Whole of life insurance lasts for the rest of your life, guaranteeing your loved ones a pay out when you pass away.
The pay out will remain fixed throughout the policy lifetime, helping you to cover large costs for your loved ones (such as any remaining mortgage debt and family living costs).
Due to the guaranteed nature of this policy type, you may wish to factor in an inheritance for your loved ones.
It’s also wise to factor in your funeral costs to help alleviate loved ones of this financial burden.
Typically, as we get older, our financial commitments reduce as the mortgage gets paid off and children grow up.
Therefore, you may not need as much cover as you once did.
The most common form of cover for those over 50 is an over 50s plan, as acceptance is guaranteed to those aged 50 - 85.
With this policy type, cover is often capped at a lesser amount (up to £20,000 depending on your personal circumstances and budget) due to no medical information being required during the application process.
An over 50s plan is a popular choice to leave loved ones the funds to help pay for your funeral and/or leave them a small inheritance to spend as they wish.
Research from the Child Poverty Action Group found that the full cost of raising a child to the age of 18 is £157,562 for a couple and £208,735 for a single parent.
With this in mind, it could be wise to have your sum assured reflect this amount to ensure there are enough funds to raise your child should the worst happen to you.
You may also choose to include additional costs such as driving lessons, a first car and higher education costs into your cover amount.
Compare quotes through Reassured to help protect the financial future of your family. Quotes start from just 20p-a-day.
We have a comprehensive how much does it cost to raise a child UK guide if you require further information to establish how much cover you should secure »
It’s estimated that the minimum required to survive as a single pensioner is £12,800 per year.
With at least 17% of UK residents over 55 having no pension or savings to fall back on (other than the state pension), you may wish to leave your partner a sum of money so they can retire comfortably.
As you reach retirement you may also start planning for later life and start provisioning for your funeral.
An over 50s plan is typically capped at £20,000 (due to no medical information being required during the application), therefore this could allow you to provide a lump sum payment to help your loved ones cover the cost of your funeral and/or provide them with a small inheritance.
If you’re still in good overall health, it could also be possible to secure whole of life insurance to provide a larger sum to help loved ones with living costs and/or paying off any outstanding debts.
If you’re reaching retirement, why not check out our over 60 life insurance page to find out more about your options »
How much life insurance can I take out?
Each insurer will have a maximum cover amount available. Through Reassured it’s possible to secure up to £1,000,000 of cover.
Although a maximum sum can sound tempting, it’s important to secure a cover amount which is right for your needs.
Taking out unnecessary cover means you’ll pay more for your monthly premium, which could become costly over the lifetime of your policy.
What type of life insurance should I take out?
When taking out life cover, you can secure term-based cover or cover that will last for the rest of your life (life assurance).
If you have specific aspects of your life that you’d like to cover, such as a mortgage or family living costs, term life insurance can allow you to help protect these for a specified period.
For example, if you would like to help protect future living costs for your loved ones you could opt for a term that aligns with when your children reach financial independence (up to the age of 18, or 21 if they are likely to attend university).
Alternatively, if you would like to guarantee your loved ones a pay out and ensure they receive funds to help cover funeral costs when you pass away, an over 50s plan or whole of life insurance policy could be more suitable.
How long should I be covered for?
Ultimately, how long you should be covered for will depend on what you want your life insurance to cover. For example, this could be:
We have written a comprehensive article answering all the key questions that help determine how long does life insurance last? »
Can I have two life insurance policies?
Yes, it’s possible to take out more than one life insurance policy.
Each policy type is well suited to protecting different aspect of your life, therefore you could opt to secure multiple policies.
For example, you could take out a decreasing term life insurance policy to help cover your mortgage alongside a level term life insurance policy to help protect family living costs.
How much critical illness cover do I need?
How much critical illness cover you require will depend on your personal circumstances.
Critical illness cover can be added to a life insurance policy for an additional fee to provide a lump sum payment if you’re diagnosed with a serious illness.
The funds received could help to cover lost income and/or pay for private medical fees/carers.
Therefore, when establishing how much cover you need, you’ll need to think about how much you and your loved ones are likely to need if you were unable to work.
We have a complete how much critical illness cover do I need guide if you require more information »
Speaking to a life insurance expert, such as Reassured, can help you establish how much life insurance you need.
We can take your personal circumstances and reasons for wanting cover into consideration to provide you with the most suitable options.
A friendly member of our team can help you compare quotes from some of the UK’s best insurers to find you our most affordable deal.
We’ll also be on hand to guide you through the application and answer any questions you might have along the way.
Our award-winning service is fee-free so why not get in touch to find your ideal policy?
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