How much life insurance should you secure?

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By Richard

Starting the new year on the right foot can include ensuring your loved ones are protected from the rapidly rising prices if the worst were to happen to you.

If you’re looking at saving money this year, locking in a fixed monthly life insurance premium the younger you are can result in a cheaper policy and significant long-term savings.

But how much life insurance should you secure, and what are the key considerations?

Level-term life insurance is a policy that covers a specified period (the term), and you can pay a fixed lump sum to your loved ones if you pass away during this time.

With prices rapidly inflating and a recession seemingly imminent, it isn’t easy to calculate precisely how much life cover you will require.

Below, leading life insurance broker Reassured has provided top tips on what to consider when securing level-term life insurance in 2023 to help you make an informed decision…

  1. Mortgage/rent costs

House prices may have recently dropped in the UK, but those with mortgages face the sting. If you renew an interest-based or fixed-rate mortgage, you may see a considerable increase in your rates and mortgage payments.

One of the most important reasons to secure life insurance is so your family can maintain their home if the worst happens to you. This way, your loved ones won’t have to deal with the additional stress of moving during a challenging period.

Level-term life insurance can be taken out to coincide with your remaining mortgage balance and term. For example, if you have 20 years of mortgage payments remaining, consider securing a policy that covers both this period and the remaining mortgage debt.

While slightly trickier to estimate in this economic crisis, talking to a life insurance broker can help you calculate the required coverage amount and source quotes from the UK’s top providers.

2. Utilities and living costs

You can’t go a day without reading about the cost-of-living crisis. Two of the most significant aspects impacted at the beginning of 2023 are electricity prices and food inflation.

While level-term life insurance can be fantastic in covering a mortgage if the worst happens, your family needs to be able to afford rising utilities, council taxes, petrol prices, and food. If this is not covered, it could result in your family being unable to maintain their current quality of life, incurring debts, or even having to sell the family home.

Fortunately, the large payout potential with level-term life insurance leaves the possibility of covering these expenses and your mortgage. However, because of the volatility of current prices, it’s difficult to predict the exact sum your family may require.

Choosing a term that aligns with any young dependents reaching financial maturity could be wise and may even coincide with the remaining mortgage payments ending.

Alternatively, you may want to base your sum (pay out amount) on your yearly income, as it could substitute your lost salary.

3. Outstanding debts

Anyone who has ever experienced financial difficulty knows how easy it is for debts to spiral out of control, and sadly, more and more people are facing this prospect entering 2023.

According to, the average UK adult’s debt (not including mortgage debt) rose from £25,879 in 2021 to £34,562 in 2022.

Would debts continue to accrue for your family without your salary if you were to pass away? If so, factoring in any debts into your life insurance sum could help your family with a future transitional period.

Writing a level-term life insurance policy in trust means the policy is detached from your estate (any savings, property, and possessions you own), meaning that those funds won’t be taken to cover any outstanding debts and will allow loved ones to benefit from the payout that was intended for them.

Again, talking to a life insurance broker or the insurer themselves could help you write a policy in trust – with Reassured offering a free trust writing service on most secured policies.

4. Funeral costs and inheritances

This may seem an unfortunate thing to think about, but SunLife reported recently that the average cost of dying is an astonishing £8,864. Even if you only receive a basic funeral, your family is still looking at paying an average of £4,056.

While the price may vary depending on whether you want a burial, cremation, or any personal funeral requests, your family may still be saddled with an unaffordable bill.

If your family doesn’t have savings, ensuring you’ve secured enough life insurance to cover your funeral is a wise investment.

If you have children, grandchildren, or other loved ones, you may also consider leaving a financial legacy. You could allocate a portion of the sum as an inheritance, helping loved ones with financial independence, education, or future endeavors.

5. The length of your cover

Level-term life insurance can have a term length of 5 – 40 years. The length of covererage you require will depend on the factors already discussed.

Your health and available budget may also influence the length of coverage you can secure.

Depending on your reasons for taking out cover, you may already know the period you wish to cover. For example, covering a mortgage until your children or grandchildren reach adulthood has a measurable timeframe.

However, covering your funeral costs can be challenging to predict with level term life insurance – especially as if you pass away after your policy has expired, your family will be unable to make a claim.

It’s also important to remember that, on average, the longer the policy term, the more expensive your monthly premiums will be. You don’t want to be paying an inflated monthly cost if the cover is no longer necessary or if you find yourself in a position where the cover is no longer affordable.

Are there other options or anything else that should be considered?

While level-term life insurance is often the most common insurance policy taken out remember that it’s not a “one-size-fits-all” policy.

There are alternative life insurance options, with some specializing in covering those over  50s, a repayment mortgage (decreasing term life insurance), or lifelong cover (whole of life insurance).

In fact, unlike other insurance policies, such as car insurance, it is possible to secure multiple life insurance policies simultaneously (although obviously, this will mean paying multiple premiums).

UK users can read the following article for more comprehensive information on taking out multiple life insurance policies;

If you’re more concerned about losing your income and supporting your family in this scenario, you may also wish to consider income protection to cover these costs.

However, when securing level-term life insurance, the main things to consider are:

  • Your reasons for obtaining life insurance
  • The amount that would be needed to cover these costs (including potential inflation rates)
  • Discussing your options with a life insurance broker, like Reassured, to find the best quotes from the UK’s top providers

You can determine how much coverage you require by considering the above details, adding the cost of each aspect you wish to cover, and adjusting it with current or expected inflation rates.

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