Have you ever wondered why Life Insurance talks about the ‘sum assured’ not the ‘sum insured’? This is because, if you pay your premiums long enough, you know you will make a claim. No other insurance has this guarantee, with life insurance, the risk is 100%.
Dying of course is not the real problem, it’s dying too soon that is (from a financial perspective). Most people are dramatically underinsured, most don’t even have enough life cover to pay their debts, let alone provide for their children.
So how much life insurance do you need? There are many ways you can estimate it and in the end it comes down to personal choice, but a good ‘rule of thumb’ is
• Clear all debt
• $100,000 per dependent child to pay for their upbringing, education etc
• 50% of total pre-death income for the survivor until all children are financially independent
A couple have personal and business debt of $500,000. He earns $80,000, she earns $40,000. They have 2 children aged 9 and 10.
Basic cover required is
• Debt - $500,000
• Children - $200,000
• Income – sufficient funds to be able to provide income of $20,000 per year for 12 years, approximately $200,000
Total cover $900,000 each
Should you wish to know more please simply complete the following form and we shall be in touch.