We all understand that we require a Life Insurance policy, but how can you decide how much cover you need. How do you know that the policy value that you have selected will provide for your family? The amount of cover or life insurance quote is decided by several factors and your own individual circumstances. If you have a big mortgage and many children you would require a larger coverage whereas if you have a teenage child and are living in a rented flat you would not require much cover. An important point to note here is that bigger the coverage, bigger is the premium. So you also need to check how much premium you can afford to pay. As a general rule of thumb, the insurance coverage should be at least seven to ten times your annual gross earnings. Agents should consider offering a life policy of face value that is ten times the annual income of the insured person. Research has shown that if the policy face value was three times the annual income, family members struggled to meet the expenses and financial commitments. It is worthy to note that a benefit bought as a multiple of current income will be a smaller multiple of the future income. If you are a parent you know that children are expensive and you need to provide for their school fees and university costs as well. If you choose the right policy right now, your family will have enough to cope with, in the event of your death, and would not have to change schools or give up education. As the sole salary earner, you must also provide enough so that your family will be able to pay the energy bills and be able to meet the day-to-day expenses. If you have a big family, going for a policy with a face value that is twenty-five times your current annual salary is advisable. In case of critical illness cover, you need to cover for your major illness and make sure that your family would receive the amount, if you are diagnosed with the illness. The list may include cancer or a stroke. Critical illness policies are generally expensive as there is a greater likelihood of a claim. So you may want to limit the amount to maybe two or three times your annual salary or maybe the size of your mortgage. It is necessary to review the life policy regularly as circumstances change over time and this may help in reducing your premiums.
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