I’ve got many clients who used to puff, pant and eye roll when they were getting quotes for insurance and they were asked the simple question, “how much do you need to insure for?” It’s pretty simple if it’s a car you’re insuring – you just say “market value”, but if it’s your home and contents? How much would it cost to rebuild and replace every little thing in there? How do you calculate that?
Even more importantly, how do you figure out how much life insurance you’ll need should the worst happen? How much would you need to insure yourself for so that your family was protected?
Let me break that down for you…
The easiest way to work out a dollar sum of how much protection you need is to start with a list of all the things you currently pay out, for yourself and/or your family, including all your debts.
These are the costs that will still need to be paid whether or not you are able to pay them, and include:
- home mortgage
- personal loans
- credit card debts
- car loans
- business loans.
Step 1: List your ongoing financial commitments and how much they cost.
Step 2: Consider the everyday things your family would still need to pay for if you were no longer able to provide for them. These include things like:
- education costs – how much will it cost to educate your children right through to high school? (Fees, books, uniforms and excursions)
- rent/mortgage payments
- food, groceries
- health insurance
- car insurance
- home contents insurance
- petrol and car maintenance
- a carer for younger children (if you have any)
- clothing.
Step 3: Grab a calculator and tally the cost of your ongoing expenses and everyday expenses.
Step 4: Consider the things you and your family would be willing to do without and subtract these from the above total.
The total amount will give you an idea of the level of life insurance cover you need.
So now, it’s time to ring around and get quotes – or call me and I can give you some trusted brokers who can help.
