What should you know?
The concept of life insurance is generally well understood. It provides a financial safety net for your loved ones in the form of a one-off payment or an ongoing income, in the event of your death.
What often isn’t clearly grasped is how much life insurance you actually need. You may have a degree of coverage in place through your employer or via your mortgage. You may even have purchased additional cover through an insurance provider.
But is it enough?
The chart below shows the estimated amount of life insurance needed to maintain an average lifestyle in the US for different income levels (note that this is for illustrative purposes only and your own needs will vary depending on your circumstances):
Why should you care?
It is not enough to simply have life insurance, it needs to be a sufficient amount of coverage to fully meet the needs of the family you would leave behind.
The amount of life insurance coverage you need is personal to you and is much more nuanced than it may appear. It involves offsetting existing assets and current coverage against outstanding debts, the family’s ongoing income needs, and the impact of inflation.
The good news is that life insurance cover can be easily obtained and is likely to cost less than you might expect.
