We are often asked how much a life insurance policy should be worth, and how much someone should be paying monthly to ensure there is enough in their policy to cover everything that is important to them if they were to pass away.
Everyone is different so we can never give an accurate figure to aim for. Everyone’s personal circumstances impact their life insurance policy some way or another. If you have a pre-existing medical condition such as diabetes or a high BMI, your premiums will likely be higher than those who are a non-smoking ‘healthy’ adult, for example.
We believe we have created a market-leading calculator for customers new and old to use, either during their application process or before you contact us to help you.
Our aim was to give customers the tools and knowledge from the calculator to get an idea of how much their insurance policy should be worth. As the UK’s No.1 Specialist Life Insurance Broker, we’re constantly looking for ways to improve our service and by offering our new life insurance calculator, you can find all the information you need on our website.
So how does it work?Let’s talk you through our calculator and give you a little behind the scenes knowledge on how it finds your perfect figure!
When you click on our calculator, you’ll find a welcome page giving you an overview of the sections and what you’ll need to input to determine the figure you’re aiming for when taking out a life insurance policy. This is the figure that will pay out to your beneficiaries if you pass away.
Your MortgageIf you were to pass away, your life insurance can pay off the rest of your mortgage to help your family with finances. At this stage, you input the amount left to pay on your mortgage currently.
You can find this figure through your mortgage provider. You can also see this figure on any credit score apps or programs you may use such as Experian or Clearscore.
This becomes the first step in your overall figure.
Any other debtsOther debts include credit cards, loans or property that you would also like to be paid off through a life insurance policy. It can also include car finance that is outstanding, or a finance that you have on other items.
If you click the + sign, you can add additional debts.
The calculator then adds these together in addition to your outstanding mortgage payments.
Your Spouse/PartnerLosing your partner is one of the most difficult things that can happen in life. Your life insurance pay out can help with any financial strains, allowing them to take time off work to adapt and grieve.
Inputting your annual salary here covers the loss of your contribution to your overall household income. We then multiply this by four to cover that loss for the next four years.
This is then added to your outstanding debts and mortgage.
Your ChildrenJust like your partner, your children will need financial support if you were to pass away too. Leaving behind money intended to support your children through school until they turn 18, as well as leaving a pot behind if they have expressed an interest in going to university, or you think that is the path they might follow.
This section is in two parts. The first calculates the average cost of having a child, leaving behind enough money for each of your children until they are 18, regardless of their current age now.
We calculate this based on the average childcare costs according to the Child Poverty Action Group’s ‘Cost of a Child’ report. We calculate this from the age of your children now until their 18th birthday for living costs and seeing them through their school years.
All you have to do is input your child’s age, and we do the rest. The average cost of a child per year is:
- £5,324.80 for children aged 11 and over
- £3248 for children between the ages of 5 and 10
- £2128.36 for children between the ages 2 and 4
- £2215.72 per year for children up to the age of 2
From here, you have an overall total to leave behind for your children, which is added to your running estimate.
Cover my Funeral CostsFinally, for many people the most important figure to leave behind for their families is enough money to cover their funeral costs. It’s no secret that the “cost of dying” is actually phenomenal, and it can often leave families in a difficult position. Finding the means for a funeral if you pass away suddenly can be a difficult strain.
The average cost of dying in the UK in 2021 was £9,263. This covers your funeral, professional fees and send-off costs to give your family the means to celebrate your life.
We have left this figure in there for you to use, or if you did have any specific costs you’d like covered for a funeral, you can add your own in here too.
Finding Out Your FigureOnce all of your figures have been input, you will be given your overall cost, with a breakdown of the figures you have inputted.
From here you can go back and take some out or add some in to make it an achievable estimate to aim for. You can then submit your details to us, and we can take it from there. Our team are experts in their field and can see how we can help you find a life insurance policy that is suitable for you and your circumstances.
We can use your estimated figure as a baseline to work out which providers can offer you that amount, and how much per month that will cost you.
To find out what you should try and aim for as a life insurance pay out, you can use our calculator by clicking here.