Your top priority if you have dependants is to ensure that they are protected financially if you were to die or be unable to work for a prolonged period. Here we concentrate on the role that life insurance can play in your financial plan.
Bear in mind that not only the loss of a breadwinner’s salary could cause financial hardship: if you are caring for children, your spouse or partner might need to pay for professional childcare and/or babysitters if you were to die.
Similarly, you should take into account any extra costs of running the home, maintaining the garden, and so on. A nation-wide government survey found that housework, still done mainly by women today, takes up more hours each day than paid work.
How much life insurance is required for my family?
Having identified that you need some life insurance to protect your family, the next step is to work out how much. You might require a lump sum, for example to pay off the mortgage, as well as replacement income, which could be provided by life insurance which pays out a lump sum which you could invest to produce the required income.