Ideally...

If you are a breadwinner

You will need to replace your current salary with a capital sum that would create enough interest to replace that salary. The better deposit accounts are returning around 5% Gross and that means that you need £20,000 cover for each £1,000 of salary

If you are a full time carer, parent or grandparent

You may not be bringing in an income but without you the household would have to find very significant costs. To replace you your family would need to find least £20,000 pa. That is a capital sum of around £400,000

These sums may seem enormous but if the household is not to suffer any financial loss they are the levels of cover needed.

In the real world ...

Most families that suffer a personal loss also suffer a financial loss. The depth of that loss is the difference between the ideal cover shown above and the amount of cover you feel you can afford.

Debts, Mortgages and the like

You should also take into account any debts that you have uninsured. it is amazing how many mortgages do not have any life insurance attached to them.

If your mortgage is already covered you can reduce your insurance need by that amount. As you can with any other cover you already hold.

Death in Service Benefit

This is an area of hot debate within the industry. Death in Service Benefit is available from many employers as part of an employment package. It exists to compensate an employee's family should the worker die whilst employed by the company. It is often expressed as a multiple of salary - often 4 times.

Whilst this sounds good but if you are not employed by the company when you die you do not receive the money. This is not good news; if you move to an employer who does not have a scheme, become unemployed or for those who are ill for a long time before they die. They may have left the company's employment at a time they may the need the cover most.

There are also issues for those who are not married or in same sex relationships. Who it is paid to is often at the discretion of the company or its trustees.

Many experienced advisers ignore Death in Service Benefit for this reason looking upon it as an extra. If you use reduce your cover in line with your current Death In Service Benefit you take the risk of your dependents facing the above issues.

How Long?

If you a breadwinner the answer is until you retire but when will that be 55/60/65? If you know when you are going to retire then the answer is easy if not you will need to take a view.

If you are a carer when will you be free of your duties? When your children fly the nest? Again only you will know.

For some Special Risk Clients the answer will be driven by what cover is available and for how long. Some medical conditions can be covered at the younger ages but can be very difficult for the older clients we will advise what the market will offer.

What product?

There are two types of cover offerd by SRB

Term Assurance  

You decide how much cover you want and how long you want it. If you die witihin that period your dependents receive the cover you choose. If you live you get nothing - apart from peace of mind. This cover is simple and cheap.

Critical Illness

You can be covered if you're diagnosed with a serious illness like a heart condition or cancer. This is up to six times more likely to happen to you than dying before age 65.

You can have the two covers in the same policy