Life insurance calculator

The amount of cover you need depends on your financial commitments and whether you want to support loved ones or leave a lump sum. You should think about:

• Your family’s future living costs and how much money might your family need for the future. If you have children, think about how much would be needed to help raise them until they are financially independent. Also consider when that might be. Do you want to support them until their 18th birthday or a little longer? Other costs to consider could be University fees, holidays, general expenses and childcare costs.
• Debts and credit cards. If you have a credit card or finance on cars or household items, you’ll want enough cover on your policy to pay any outstanding balances off.
• Your mortgage balance, if you own a property. If you want to pay off your mortgage balance you’ll need to get enough cover for this. You should be able to get your outstanding balance from your lender or find it on your most recent mortgage statement.
• Your rental contract, if you rent. Consider your rental contract and how much money you need to honour it. This will also depend on how long your family plans to stay at the address. You should also budget for annual rental increases as well as any other monthly bills and fees you currently pay. This could be things like council tax, gas and electricity and water bills.
• Whether you’d like to leave a lump sum. This could be unseen expenses, leaving a nest egg for family, other financial commitments or daily living costs. This figure might also include funeral expenses. According to Sunlife’s Cost of Dying report, the average cost of a basic funeral is £4,184¹. Could your family afford to cover those costs without there being cover in place?
• If you have any other life insurance policies. You could reduce your amount of cover if you have other policies, such as ‘death in service’ from your employer. Or you could use this in addition to your new life insurance policy, acting as a lump sum or an extra amount.

¹Sunlife Cost of Dying Report 2021

The short answer is for as long as you need it.

If you’re taking out a policy to cover your mortgage, it’s a good idea to tie the policy length to the remaining years you have left to pay. If you have 20 years left on your mortgage, getting cover for at least 20 years makes the most sense.

If you’re just after a pay-out to support your family once you’re gone, think about how long they’re likely to be financially dependent on you.

Most policies have a minimum length you need to hit, too. This differs from policy to policy but is likely to be between one and five years. It all comes down to what you want your policy to cover you for. Tie your policy length to that and you can’t go too far wrong.