Life insurance helps give your family financial protection when you are no longer around.

It allows you to leave money behind to help your loved ones clear outstanding debts and continue to pay the bills when you’re gone. It will replace your lost income, ensuring your family can maintain their standard of living.

Factors to Consider

Income Replacement:

Consider how much income you provide for your family. A common rule of thumb is to have coverage that is 10-15 times your annual income.

Example: If you earn £60,000 a year, you might aim for a policy between £600,000 and £900,000 to ensure your family can maintain their standard of living in your absence.

Debt Repayment:

Calculate all debts that would need to be paid off, including mortgages, car loans, credit card debt, and student loans.

Example: If you have a mortgage of £250,000 and £20,000 in credit card debt, you should consider adding £270,000 to your coverage.

Children’s Education:

Think about the costs of your children’s education. Factor in tuition fees and other related costs for college.

Example: If you estimate that your children will need £100,000 for college, add this amount to your coverage needs.

Final Expenses:

This includes funeral costs and any outstanding medical bills. The average funeral can cost between £7,000 to £12,000.

Example: If you estimate £10,000 for funeral expenses, include that in your calculations.

Other Considerations:

If you have a spouse or partner who relies on your income, consider their needs and future expenses.

Think about any other dependents or special needs individuals you might support.

Calculation Example

Let’s put this all together in an example:

Annual Income: £60,000

Income Replacement (10-15x): £600,000 - £900,000

Mortgage Debt: £250,000

Credit Card Debt: £20,000

Children’s Education: £100,000

Final Expenses: £10,000

Total Coverage Needed:

Income Replacement: £600,000 (using the lower end for a conservative estimate)

Debt Repayment: £270,000 (£250,000 mortgage + £20,000 credit card debt)

Children’s Education: £100,000

Final Expenses: £10,000

Total: £600,000 + £270,000 + £100,000 + £10,000 = £980,000

Ask yourself if anyone would suffer financially if you passed away. Life insurance is worth it if it would safeguard the future of your family and the choices they’ll have if you’re gone. Personal finance experts suggest having coverage of at least ten times your annual salary to ensure your family's financial security.

You likely need life insurance for:

Dependents:

If you have anyone who relies on your income, life insurance can provide essential financial support for them if you pass away. With the cost of raising a child often exceeding tens of thousands of pounds, having life insurance can help secure their future and ensure they are taken care of.

Financial Obligations:

Homeownership comes with significant financial responsibilities, like a mortgage, which could burden your loved ones if you were to pass away unexpectedly.

Income Replacement:

For those who are the primary earners in their households, life insurance acts as a safety net. It can replace lost income, ensuring your family can maintain their standard of living and cover ongoing expenses like bills, groceries, and school fees.

Business Considerations:

If you own a business, life insurance is crucial for maintaining operations after your death. It can protect your business partners and ensure the continuity of the business, safeguarding both your family's financial future and the livelihoods of your colleagues.

End-of-Life Expenses:

Funeral costs and other final expenses can be a heavy financial burden on your loved ones. Life insurance can help cover these costs, giving you and your family peace of mind during a difficult time.

Considerations for Specific Groups:

- Partners: If you share debts or financial plans with a partner, life insurance ensures they are taken care of if something happens to you.

- Students: Young adults with student loans should consider life insurance, as their debts might fall on parents or cosigners if they pass away.

- Retirees: For those nearing retirement, a whole life insurance policy can cover final expenses, easing any financial worries for your loved ones.

- Caretakers: If you provide care for someone who depends on you, life insurance can ensure they receive the necessary support if you are no longer able to care for them.

According to the Association of British Insurers (ABI), 97.5% of all life insurance, income protection and critical illness claims were paid in 2022. Both group and individual protection insurance claims totalled £6.85 billion.

Before every offer you receive from Safecover, you will get expert advice to help you decide, completely free of charge.