Life What level of life insurance

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babydays

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What level of life insurance should we have?

My husband is sole earner and we have three kids under 6.

Have mortgage protection in place (E40 p mth).

Is there a rule of thumb for calculatiing the appropriate level of coverage?
 
If you deduct the mortgage from your partners nett pay ,deduct whatever income support you would get from the state,this would give a rough idea of the amount you would have to replace.You would need to multiply this monthly figure by 12 and then by roughly 25 to get an amount you would need to insure for.(minimum)
 
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thanks vandriver,

is it that straightforward?

Should I include for inflation? How would I do that?

What should I include for planning for children's education etc? At this stage the kids are not costing much in terms of clothings, hobbies or 3rd level ed. How would I calculate what we'd be needing in 15 years time in terms of all of that?
 
Actually, on reflection. If the death occured the payment would be made in one cheque so most of it could be invested and the return used for college funds etc. Does that make sense?
 
There's some new types of life assurance on the market that are aimed at income replacement rather than once off lump sums.

The idea is that you are trying to replace a regular income from somebody - and a single large payment is not what people are used to. There's a long story in this month's Inc magazine about it.

If you can't get that type of policy then you can always just work it out anyway - how much per month do you need to keep going? In which case, how much capital do you need to produce that income?
 
I read you want about 8-10 times your salary for a life insurance policy. But depending what policy you get, you can always use it to borrow against, which could be useful down the line.

myallstatefinancial.com

Kevin
Allstate Insurance Advocate
 
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