Life Insurance Calculator – How much Life Insurance do I need?

Deciding on the amount of Life Insurance you need is often a personal decision – no one knows your circumstances better than you do. While your adviser can discuss your options with you, ultimately the decision will need to be made by you.

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What should my policy cover?

There are a number of things you may want your policy to cover. Below is a general list:

Outstanding mortgages

Make sure any life insurance policy you have can pay off all or some of your mortgage so family is not burdened with trying to pay this off when you’re not around.

Any other debt

Do you have any car leases, personal loans or credit card debt? By including these in your life insurance amount, you can ensure your family has no debt to pay off.

Day to day living expenses

How much does your family spend every day on groceries and food, electricity, water and gas and other day to day expenses? By making sure these are covered, your family can continue to live their lives as normally as possible.

How many children do you have?

Making sure your children’s education and future is covered may be incredibly important to you.

If you are unsure about what your policy should cover, your financial adviser can help you discuss your options.

What factors will influence my decision?

Once you have decided approximately what level of cover you want, a number of factors may influence the exact level of cover you take out when you are comparing quotes:, including:

1. Affordability

The larger your lump sum benefit, the higher the cost of your life insurance will be. It is always important to consider what you can afford now and in the future before deciding on what level of cover you want.

Options available to help reduce the cost of your cover:

Furthermore, as we have access to a number of insurers, we can always compare your policy to find out of there is anything more competitive available.

2. Premiums

Insurance companies generally offer three premium styles

  1. Level Premiums – start off more expensive than Stepped Premiums but become cheaper in the long wrong.
  2. Stepped Premiums – start off cheaper than Level Premiums but increase as you age.
  3. Hybrid Premiums – an additional cost option, Hybrid Premiums start off more expensive than Stepped Premiums but convert to level premiums once the premium amount is more than the equivalent level premium amount.

3. Length of time you intend to hold cover

If you intend to hold your cover for longer than 7 years, you may wish to consider Level Premiums. However if you only intend to hold your policy for less than 7 years, you may wish to consider Stepped Premiums so your policy is more affordable.

4. Your age

The younger you are when you take out cover, the cheaper it will be. It is always important to take out a life insurance policy as early as you can as you will never be as healthy as you are right now.

5. Types of cover chosen

When you are considering how much cover to take out, you may also want to consider what other types of life insurance you have taken out:

Published: August 1, 2013

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