Why Life Assurance Required ?

Life Insurance - How much cover do I need?

Life insurance is needed to provide financial security by way of lump sum cash or regular income for your family or partner on a premature death.

Consider a 30 year old earning £30000pa who dies prematurely. To a retirement age of 65, that is over £1 million of lost income and that ignores the depleting effect of inflation.

Follow our easy guide to Life Insurance needs. Remember, to suit your budget, some Life Insurance is better than none.

Capital needs

There would be various capital items for which a lump sum would be needed if the main earner died. These include:

Funeral and other related expenses	£
Emergency funds (3-6 months' expenses)	£
Specific bequests	£
Mortgage, debts, loans and guarantees	£
Inheritance Tax	£
Other	£
Total	£

For this total you should consider LEVEL TERM ASSURANCE
This will pay the required lump sum on premature death.
Typically the term in years should be until retirement or to when you consider the mortgage will be repaid and capital needs can be covered by savings.

Long term income need

It would be necessary to provide a long term source of income to the surviving partner for life. The income needed for this purpose would be based on your current level of expenses, taking into account the costs that would cease if the main earner were to die.

Partners' continuing needs
The level of income needed for the long term can be calculated as follows:

Partners' continuing expenses	£
Plus any extra long term costs	£
Less continuing long term earnings and/or pension	£
Less long term state benefits and/or widow/widower's pension	£
Total net long term income required	£

For this total you should consider FAMILY INCOME BENEFIT

This will pay a regular annual tax free income for the term of the policy on premature death of the life assured.

The term should be the time in years before the surviving partner would be financially secure.

Children's or other dependant needs

The family's income required for these shorter term needs would be broadly as follows:

Annual expenses for children/other purpose	£
Plus extra short term costs (e.g. child care)	£
Plus other short term needs	£
Less extra short term net income (e.g. dependant's net pension and/or family income benefit)	£
Less short term state benefits (e.g. widowed parent's allowance (see allowances))	£
Total net short term income required per year	£

For this total you should consider FAMILY INCOME BENEFIT

As above this will pay regular annual tax free income on premature death of the life assured. The term should be until the Children or dependant is self sufficient and no longer financially dependant.

You may wish to combine the Long Term Income and Children's needs to obtain a single policy.

Level Term Assurance and Family Income Benefit include a valuable option of indexing the life assurance so it increases annually in line with inflation. This must be selected at outset if required.