How Much Life Insurance Do Parents Need?

publication date: Oct 15, 2021
author/source: Ben Bendall

Life Insurance

Life insurance is designed to leave behind a cash lump sum to protect your family if you were to pass away unexpectedly. If your children and partner rely on your income to pay the bills and cover day-to-day costs, then it’s certainly worth thinking about taking out a life insurance policy. It can help to provide your loved ones with financial stability at an emotionally difficult time.


How much life insurance do you need?


When applying for life insurance, you’ll need to decide how much cover you need. The cover amount is sometimes referred to as the "sum assured" and this is the sum payable to your family if you were to pass away whilst the policy is in place. 


Some insurers recommend that your sum assured equates to approximately ten times your annual salary. However, you can also work out how much life insurance you need by adding up all your financial obligations.


Elements you may want your life insurance to cover:


  • Mortgage – with your mortgage paid off, your family won’t need to worry about the repayments and can remain in their home
  • Household bills – running costs of the home such as gas, electricity, water, council tax and internet
  • Family living costs – day-to-day expenses such as food, drink, clothing, and travel, as well as future costs for example, holidays and education fees
  • Childcare – if you passed away, your surviving partner may need to organise childcare or take time off work to look after the kids. £252.07 is the average cost of full time childcare in the UK
  • Inheritance – do you want to leave behind a cash gift for your children and/or grandchildren?
  • Funeral costs – the average cost of a funeral is currently £4,184 Many people take out life insurance to help alleviate this financial burden from their loved ones.

How much life insurance can you get?


How much life insurance you can get depends on a variety of factors but, generally, you should be able to get enough cover to protect your financial commitments and ensure that your family can continue their current lifestyle if you were no longer around. Some insurers offer a maximum sum assured of £1 million, but this is usually more than what’s necessary for many families.


Factors which can affect how much life insurance you can get include:


  • Your age – the main factor in determining the cost of your premiums. Depending on your age, you may only be able to afford a certain level of cover
  • Your health – pre-existing medical conditions, such as diabetes, cancer or depression, can also impact the cost of your premiums and thus how much cover you can get. Mental health conditions, such as depression and anxiety, have increased significantly post the COVID-19 pandemic. Award-winning broker have written this comprehensive article if you require additional information on how depression affects life insurance
  • Your lifestyle – smoking, alcohol consumption and drug use are all factors which will impact your life insurance options. A high-risk occupation or hobby will also be taken into consideration
  • Your budget – the sum assured will need to be at a level that’s affordable for you.


How much does life insurance cost?


Life insurance can start from just a few pounds a month. Term based life insurance, particularly decreasing term, is usually the cheapest policy type and a popular choice for young families with a mortgage.


As mentioned, factors such as your age, health and lifestyle will affect the cost of your premiums, as well as the terms of your policy. Also, quotes for life insurance vary between insurers, so it’s sensible to get more than one quote and compare your options. This can be done quickly and easily by using a fee-free FCA regulated broker, such as Reassured or Cavendish.

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