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How Much Life Insurance Cover Do You Need?

How Much Life Insurance Cover Do You Need?

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Life insurance is something that we all need. A lot of people assume that life insurance is only for breadwinners and those with children. This is not the case. Life insurance is critical because it makes sure that your loved pens are covered should you pass away. However, working out how much cover you need can be difficult. It is all about finding the right balance. With that in mind, in this post, we are going to take you through the different steps entailed when it comes to working out what level of life insurance cover is going to be right for you.

There are calculators and tools online that can provide help and assistance

Before we take you through the different steps that we recommend when it comes to determining life insurance coverage, we are going to make sure that you are aware that there is help available. We don’t mean that you need to ring up a life insurance company and stay on hold for hours, don’t worry! You can use one of the many tools and calculators that are online, like this over 60 life insurance calculator. This will help you to determine the payout you will receive, as well as the costs, so it can help you to determine the right coverage for you passed on your own situation. After all, the calculator mentioned is specifically for over 60’s, as life insurance tends to be more expensive at this age, and you will find other calculators like this as well, so it is worth looking into this.

How do you work out how much life insurance coverage you are going to require?

Now that you know that there are some tools you can use, we are going to tell you more about the steps you should take to find out what coverage is going to be right for you. The first thing you should do is add up all of your debts. This not only includes your mortgage, but any personal loans, car finance deals, or credit cards that you have at the moment. You also need to add up any costs that you want to be covered by insurance. This includes university or school fees and child maintenance, for instance. You may also want to make sure someone is left with a lump sum, for instance, to cover their funeral expenses. 

Next, figure out if you have any sort of cover in place at the moment. For instance, should you be employed, your benefits package may incorporate a payout called death-in-service, which is basically a lump sum of money that is a multiple of your yearly salary when you pass away. A lot of people do not realise that they have some level of cover in place with different policies and plans, so before you take out any sort of life insurance make sure that you are aware of this. 

Now, you are ready to figure out what sort of coverage you are going to require. You use the two figures above to determine this. Therefore, the total amount your dependants require is the starting figure, and then you are going to subtract the cover or the benefits that you have already. For some people, who do not have any coverage at the moment, you will not subtract anything. The figure you are left with is the amount of life insurance cover you should take out. 

There are a lot of people that like to determine life insurance by multiplying their yearly income. You can either multiply your yearly income by five or ten to figure out how much life insurance is going to be right for you and your needs. You could use both options and then opt for the higher of the two to make sure you have plenty of coverage in place; the choice is, of course, yours!

So there you have it: an insight into the different steps that you should take when you are figuring out how much life insurance cover is going to be right for you. You need to think about the mortgage payments or rental payments you make at the moment, your take home income or pay from other sources, any dependents you have, and all of the other factors that will impact the right coverage level for your needs. There are also tools and calculators online that have been designed to provide you with assistance if you are struggling.

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