If you’re considering buying life insurance, one of the first steps is to decide how much life insurance you need. This is entirely subjective, but a basic sum can give you some idea of what may be a good amount:

All Financial Commitments minus Existing Assets (that could be sold) 
equals Your Life Insurance Requirements

In very basic terms, to understand how much life insurance you’ll need, you need to understand how comfortable you’d want your loved ones to be if you were no longer around. Many of our customers want to make sure big debts (such as mortgages, for example) are covered to give financial protection to their family.

There’s a few other methods for working out a figure:

By Multiplying Your Income

This is a rule of thumb here and inherently light on detail, as it’s different for everyone. Some people it might be 4 times, or even 8 times - it’s what you as an individual needs, minus the assets your family could sell on.

By Working Out Your ‘D.I.M.E’

D.I.M.E stands for Debt, Income, Mortgage and Education and makes you add these amounts up:

  • Debt: How much debt would you leave to your family? Remember, some debts don’t carry on after you die.

  • Income: Multiply your income by the number of years you want to provide income replacement for your family.

  • Mortgage: Add the remaining balance on any existing mortgage(s) you have.

  • Education: Add an amount that covers any university fees or specialist training you’d  want set aside for any children you have.

Once you have this figure, you can then subtract any existing savings you have  as well as any other insurances you may have from work, like ‘Death In Service’ benefit.

It’s a blunt tool, but is certainly a good starting point to get you thinking about your current (and future) financial situation.

Once you have an idea of a figure you can then decide what type of policy you’re looking for and can apply for a separate ‘single’ life insurance policy as an individual, or as a joint policy with your partner or spouse.

The 2 main types of life insurance are 'term' life insurance and 'whole-of-life' insurance.

‘Term’ life insurance policies run for a fixed period of time (known as the ‘term’ of your policy) eg. 10, 15 or 25 years - but only pay out if you were to die during the term of the policy. There’s no lump sum payable at the end of the term.

‘Whole-of-life’ insurance policies pay out regardless of when you die, as long as you keep up with your premium payments. This type of cover is typically of interest if you are determined to leave some form of inheritance to your family, or if you want to help with your funeral costs.

Naturally, these policies are typically more expensive than term insurance policies since as long as you keep paying your premiums, the insurer will always have to pay out, whereas you may outlive a term insurance policy.

If you’re not sure, speak to us over the phone or through live chat, and we’ll be able to give you all the information you need to help you decide what’s best for you.

We Shop Around

At Cavendish Online, we’re committed to ensuring our online life insurance fees and charges are highly competitive and transparent - so you know exactly what you are paying for when you use our different services. 

We can help you find the best and most affordable option for your individual circumstances with products from leading financial service providers and the best value possible with minimal charge amounts.

Go Online Or Give Us Call

Our website is easy to use and you could even have a policy arranged in as little as 30 mins. However, if you’re still not sure what’s the best amount of cover for you - you can just pick up the phone and speak one-to-one with one of our insurance specialists who can guide you through the process and support you in choosing the best option for you and your family. 

Call for a quote...

For more information and to get a quote please call us on:

03456 44 25 40

Apply with advice