How much cover do I need?
How much insurance cover you need for different life insurance types is vitally important if you want to ensure your family is not left in financial despair should something happen to you and you were no longer able to provide for them. To make certain that you're not under-insured you have to take several things into consideration, such as the following:
- Your family’s financial situation in the future as well as now. Many people do their maths on their present financial situation when assessing how much life insurance they need but as we all know, nothing is static in life. Our assets and debts today might not be the same in 5 or 10 years time let alone 15 or 20 years.
- How your dependents could create an income stream with the lump sum payment they'll receive. The money needed to invest to deliver a living wage of sufficient income.
- The level of debt you expect to carry in the future. As your pay off your mortgage the debt will of course decrease.
Life insurance is all about protecting your loved ones, or creditors, against any future adverse happening to yourself. It's therefore a means of risk protection planning for the future.
Life insurance is insurance which primarily covers you for death. It pays a lump sum to the surviving family members or beneficiaries after the insured’s death. Therefore, it can serve as a basis for financial security and protection.
Other benefits of life insurance are to:
- Reimburse funeral costs
- Pay off mortgage and other financial obligations that have been left by the insured behind
- Take care of your estate planning needs
- Pay for other extra expenses your family might need, like child care
- Provide a reserve for the remaining spouse should he or she decides not to work anymore