Life Insurance

Pepperoni

Hi,

I wonder if you could help please.

Typically, what amount is best to cover in life insurance? I'm thinking outstanding mortgage amount? But the website is saying a years worth of income...?

Thank you!

InsideInsurance

Anything from nothing to several years salary.

Many people have more than one policy to cover different things, a decreasing one to cover their mortgage and then one or more level term ones to do things like provide for their kids until their 21 or provide a sum for their partner if they die before retirement age etc

All comes down to your personal circumstance and priorities. Some want their partner to maintain their lifestyle if they die others really dont care because they'll be pushing up the daisies

Pepperoni

That is really helpful, thank you x

dunstonh

Typically, what amount is best to cover in life insurance?

One that fits your needs. There is no one figure.

I'm thinking outstanding mortgage amount? But the website is saying a years worth of income...?

a years worth wouldnt be enough for most people. a long way from it. A really crude method with no fine tuning is to use 10x annual income plus debts as a figure. However, that scenario would typically see multple policies used as the type of life assurance needed with a mortgage would be different for family protection.

nts1vn

I thinks you need call to insurance company for best answer.

dunstonh

nts1vn wrote: »

I thinks you need call to insurance company for best answer.

The majority of insurance companies are not authorised to give advice. So, they could not answer that question.

kingstreet

I'm a big fan of Family Income Benefit.

What's the big problem with lump sum life cover? If the life assured dies on day one, the sum assured is paid and the benefit has to be averaged out over the term of the need.

If death takes place the day before the policy/need ends, it's more like a lottery win. The need is ending, but the full amount is payable.

As a consequence, the premiums for lump sum level term assurance are higher.

If you need to replace an income on death, let's say it's gross £30k per annum and the need will last twenty years, a Family Income benefit for the net £23,000 per annum will give you the equivalent of that £30k salary.

As FIB only pays out for the remainder of the term after death takes place, it covers the period of the need and as it's effectively decreasing cover, it's a lot cheaper.

For example, a level term for £23k x 20 years (£460,000) would cost £31.40 per month, while an FIB for £23k per annum paid for 20 years would cost £17.87 per month.

Quote details are like for like - male 40NB non-smoker, admin job no waiver.

Jkleiman

There is no blanket rule and it is worth discussing your specific needs with an adviser who can look at your specific situation.

These days there are providers who give you additional benefits and rewards such as VitalityLife who give you half price gym membership, free cinema tickets every week and many more.