How Much Should I Insure My life for?
This is a question that you might ask yourself when you are thinking of taking out life insurance and it can be one that is difficult to answer.
The first thing to consider is why you want to take out the insurance. If it is to make sure that there is enough money to bury you when you have died then you will need to think about how much that might be. If it is to provide a lump sum for your dependants, then this might be a lot more money. So you need to consider what sort of amount will be right.
The problem with this is that you do not know when you will die. This means that you will not know how much things will cost at that point in time. Therefore you may need to estimate how much money might be needed to pay for whatever you would like the insurance payout to cover.
The next challenge could be the cost of the insurance. If you are young and in good health, then the insurance will not be very much. But the older as less healthy you get, the more expensive the insurance and so you may find that it is rather expensive to pay for the amount of cover that you want.
It can be a good idea to look around at different insurance providers as they will charge different amounts as so some may be more affordable than others. A cheaper cover will give you more return for your money.
It is worth considering how much money you will have in the future as well. When you get older your income will change and you need to think whether you will still be able to afford to keep paying in to that insurance. You may want to consider a term insurance which you will just pay in to for usually 25 years. This is better in some ways as it will still pay out if you die in that period but you will not have to pay it forever. It can be cheaper as well, but once you stop paying in, you can no longer claim on it if you die. However, once you get older your dependants may no longer need the money anyway. A whole of life insurance will be more expensive but you will pay in until you die and so there will always be a payout.