Life insurance calculator guide
While most of us will have a good understanding of when we might need life insurance, working out how much cover to choose can be tricky.
Try our life insurance calculator. Or read on to find out more about matching your level of life cover to your personal circumstances.
How much life insurance do I need?
Calculating the right level of life cover involves considering a range of factors, including:
- How many people depend on your income? How long they are likely to depend on your income?
- Other financial obligations you could be passing on to your loved ones (such as mortgage repayments, other debts/loans, or funeral costs)
- How long you might live for? Will you need cover for the whole of your life? or only a certain period
Your cover will pay out a lump sum that you select at the outset and the premiums will remain the same throughout. Alternatively, you can select to protect your level of cover against the potential effects of the increasing cost of living by opting to have the cover increase through the period of cover. Please note the premiums will also increase.
Work out the right level of life insurance cover for your needs
The following questions are designed to help you work out what level of cover might be right for you.
What do you owe on your mortgage/what will your future rental payments be?
Clearing a mortgage is one of the most important reasons to buy life insurance. You should ensure you choose sufficient cover to clear the outstanding balance on your mortgage (which you can find on your online mortgage account or your most recent mortgage statement). If you rent, try to work out how long you expect your family to live at your current home and what the rental payments might be over that time, budgeting for rent increases.
What other outstanding debts/loans do you have?
Your life insurance should also be sufficient to clear outstanding credit card/store card balances, car loans etc.
How much do you want to leave to support your family?
While it’s important to cover financial obligations such as loans and debts, you should also think about other costs your family might incur while your children are young enough not to be financially independent. This could include the costs of education, holidays, clothes, transport and other expenses, as well as the cost of your funeral.
Do you have any other life insurance?
If you have any other life insurance, for example death-in-service cover through your employer, you may be able to reduce the amount of cover you need. Once you’ve worked out how much other life cover you have, you can subtract it from the total you might need. It’s important your level of cover is updated if your circumstances change (for example if you leave your current employer and are no longer eligible for death-in-service cover).
Zurich Life Insurance Calculator
Now that you’ve worked out the costs that need to be covered in the event of your death, you can calculate how much cover is right for you.
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