How Much Insurance Cover?Firstly you should have enough insurance cover to repay your debts (Mortgage, Credit Cards, loans etc) and to have enough capital to provide an income. Typically most financial advisers recommend having ten times (10X) the main salary of the household as the sum you are insured for. Also ask about index linking the cover to keep it up with inflation. Term assurance is the least expensive way of providing life cover; it runs for a fixed period of time. If the person(s) insured die then the lump sum is paid out, tax free at present. Family Income Benefit is similar but an income is paid out until the end of the policy's term. If you have life cover to protect your mortgage it is worth reviewing this as the premiums vary so much, you may be able to get the extra cover you need as a parent included without increasing the premium with another company. If either parent is a member of a company pension scheme, that scheme may provide life cover for the member. Typically this will provide a multiple of salary, 1 times, 2 times or 3 times annual remuneration but it is important to remember that if you change jobs you will lose this benefit. Also this still leaves you far short of ten times your salary.
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