How do you put a numerical value on a life? It’s hard isn’t it? The contributions and impact of a loved one stretch well beyond the realm of money, yet so many Brits are underestimating how much they’re worth when it comes to life insurance.
A study conducted by Money Supermarket found that Britain’s without life insurance underestimate their worth by an average of £48,809, with some undervaluing themselves by as much as £140,000. It was also found that women tend to value themselves 25% lower than men and those in Northern Ireland think they need half the life cover as those in London. With such big differences in perceptions, it’s no wonder that people can often be left with unsuitable cover.
How To Work Out How Much Life Insurance You Need.
Life insurance is one of the most important and selfless things you can buy. It can provide your loved ones with financial security should you no longer be around as can provide assistance with things like mortgage payments, the costs of raising a child or just maintaining their standard of living during a stressful and emotional time.
But how do you know how much cover you need? Well there are a lot of factors to consider
Mortgage
A mortgage is the biggest financial commitment most people have. If you have a mortgage, your life insurance should be enough to cover the repayments should you not be around to make them or the responsibility will be left to your loved ones.
Children and Dependents
The cost of raising a child from birth to age 18 is £184,329, a daunting sum for a couple, never mind one person. On top of this, children are remaining financially dependent for longer, with parents assisting in 25% of 20-34 year olds still living at home. This makes it important to take your children and any other dependents into account when deciding on a life insurance sum.
Income
Another consideration would be how much money you bring in to your family. If you are the main breadwinner, it may be useful to provide enough money to cover your salary should you not be around. However, if you’re a stay at home parent, don’t underestimate your value. Should the worst happen, your partner may need to take some time off work or pay for services such as child care, which can add up fast.
If you require more information on what your life insurance needs may be, feel free to give TopQuote a call on 0161 233 3110 and we’d be happy to tell you about your options.