The amount of cover you need will depend on your own personal circumstances, there is no one-size-fits-all answer. The factors you may need to consider include covering;
- Mortgage or rent payments
- Any other loan or debt repayments
- Household bills
- Education and childcare expenses
- Loss of income
To help you decide how much cover you would need, we’ve put together some examples:
First-time buyer
Meet Gemma, she’s 33 and working as a teacher. Gemma is buying her first home with her partner and this new financial burden has highlighted the responsibility she has to her partner and vice versa. Gemma is taking out life insurance to protect her partner should the worst happen to her, so they will be able to pay off the mortgage.- Gemma and her partner decide to get 2 single policies
- They choose the Decreasing cover option as this is common for covering a mortgage
- The cover amount they decide on is £180,000 as this is the total amount on their mortgage
- And the cover term they choose is 35 years, again this is because their mortgage has a 35-year term.
Home mover
Meet James, he’s 40 and is a carpenter. James is married with a child and his wife is pregnant with their second child, this is causing them to move into a larger house and increase their mortgage. James wants to make sure his life insurance covers this increase in the mortgage and still provides enough cover for his family should he pass away.- James and his wife decide to get a joint policy
- They choose the Level cover option to ensure they have enough cover to protect their children
- The cover amount they decide on is £350,000, this covers both their increased mortgage and the cost of education/ childcare
- And the cover term they choose is 30 years, to cover them for the entire term of the mortgage and until their children are old enough to be financially independent.
Remortgager
Meet Sarah, she’s 42 and works as a care assistant. Sarah has a home with her partner, and they are currently remortgaging. Sarah is very aware of the financial impact of losing a loved one, as she often sees that at work. She wants a quick way of removing the anxiety of worrying about this for her partner, and life insurance can do that for her.- Sarah and her partner decide to get 2 single policies
- They choose the Increasing cover option to ensure they leave behind a large enough cover amount to ensure the other is financially secure
- The cover amount they decide on is £200,000 because this is the amount they believe would allow their partner to maintain their current lifestyle and cover the cost of the mortgage
- And the cover term they choose is 20 years
Renter – young family
Meet Emma, she’s 30 and is a retail assistant. Emma is a single parent with a young child and rents her home. She wants to take out life insurance to protect her daughter’s future and make sure she’s financially provided for if she’s no longer around.- Emma decides to take out a single policy
- She chooses the Level cover option to make sure the cover amount she selected is what is paid out
- The cover amount she decides on is £150,000 as this will cover any childcare and educational costs for her daughter
- And the cover term she chooses is 18 years which means her daughter will have grown up and completed her education before the plan expires.