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Work out how much life cover you need
It’s not easy to calculate how much life insurance cover you need. Finding a balance between making sure you leave enough for your loved ones, and affordability can be a fine line.
When you compare life insurance quotes, we’ll ask you how much cover you need. Having this figure ready can help speed things up. So, whether you’re single, a family, or over 50 our life insurance calculator can help you work out how much cover you might need.
Life insurance calculator
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How much life insurance do I need?
The amount of cover you need depends on your financial commitments and whether you want to support loved ones or leave a lump sum. When taking out life insurance, you should consider:
- Your family’s future living costs and how much money might your family need for the future. If you have children, think about how much would be needed to help raise them until they are financially independent. Also consider when that might be. Do you want to support them until their 18th birthday or a little longer? Other costs to consider could be University fees, holidays and general expenses.
- Debts and credit cards. If you have a credit card or finance on cars or household items, you’ll want enough cover on your policy to pay any outstanding balances off.
Your mortgage balance, if you own a property. If you want to pay off your mortgage balanceyou’ll need to get enough cover for this. You should be able to get your outstanding balance from your lender or find it on your most recent mortgage statement.
- Your rental contract, if you rent. Consider your rental contract and how much money you need to honour it. This will also depend on how long your family plans to stay at the address. You should also budget for annual rental increases as well as any other monthly bills and fees you currently pay. This could be things like council tax, gas and electricity and water bills.
Whether you’d like to leave a lump sum. This could be unseen expenses, leaving a nest egg for family, other financial commitments or daily living costs. This figure might also include funeral expenses. According to Sunlife’s Cost of Dying report, the average cost of a basic funeral is £3,9531. Could your family afford to cover those costs without there being cover in place?
If you have any other life insurance policies. You could reduce your amount of cover if you have other policies, such as ‘death in service’ from your employer. Or you could use this in addition to your new life insurance policy, acting as a lump sum or an extra amount.
1Sunlife Cost of Dying Report 2023
How long should I get life insurance for?
If you’re taking out a policy to cover your mortgage, it’s a good idea to tie the policy length to the remaining years you have left to pay. If you have 20 years left on your mortgage, getting cover for at least 20 years makes the most sense.
If you’re just after a pay-out to support your family once you’re gone, think about how long they’re likely to be financially dependent on you.
Most policies have a minimum length you need to hit, too. This differs from policy to policy but is likely to be between one and five years. It all comes down to what you want your policy to cover you for. Tie your policy length to that and you can’t go too far wrong.
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What are the different types of life insurance?
Life insurance
is individual cover that pays out when the policyholder dies.
Critical illness cover
pays out a lump sum if you're diagnosed with an illness covered by your policy
Mortgage life insurance
pays out an amount that decreases over time, usually in line with your mortgage
Joint life insurance
covers two people on a single policy, paying out if either of you die during the policy term
Over 50s life insurance
offers cover for the over 50s, with acceptance guaranteed up to age 84. No medical or health questionnaires required
Health insurance
covers the cost of private medical care, helping you avoid NHS waiting lists to get the cover you need, quickly
Income protection insurance
covers your bills if you're injured or ill and are unable to work. Short term policies and longer ones available
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Confused Life is provided by Direct Life & Pension Services Ltd, who are authorised and regulated by the Financial Conduct Authority. Registered office; 2nd Floor Gateway 2, Holgate Park Drive, York, United Kingdom, YO26 4GB. Registered in England and Wales No 2467691. Our service is free and compares a wide range of trusted household names. Confused.com is an intermediary and receives commission from Direct Life & Pension Services Ltd which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don’t promote any one insurance provider over another.
