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No one likes to think about things going wrong, but go wrong they do… usually without much warning.
As soon as we bought our first flat in London together OH and I made the decision to take out life insurance, Obviously, we had no intention of needing it (frantically looks around for something wooden to touch), but we knew it was irresponsible to bury our heads in the sand and not to cover ourselves for all the ‘what ifs’.
I had lots questions at first – how do I decide on a provider? How much life insurance do I need? Can I set it up online? It ended up being quick, simple and surprisingly cheap to ensure our financial security.
In fact, the trickiest part was figuring out the amount of cover we needed, as there was more to consider than we first realised…
How Much Life Insurance Do I Need?
OH and I split all the household expenses down the middle, so we initially worked the cover amount out to be half the remaining mortgage. If the unthinkable happened and one of us died, at least that person’s contribution would be completely paid off, meaning the remaining person wouldn’t suddenly have double the mortgage to pay.
But then our advisor pointed something out, particularly since we were both self employed at the time: ‘If you’ve just lost your partner, are you going to be able to go straight back to work?’ he asked. ‘If yes, you might suddenly find yourself with a hefty bill for wraparound childcare. Your bills and living costs will double, and the average cost of a UK funeral is around £4500 – have you thought about how you’ll cover all of that?’
‘Then…’ he continued, ‘what happens once you have children? Having enough life insurance means you won’t have to rush back to work just to cover the bills. You give yourself the option to spend time at home with your children, giving you all space to breathe and grieve.’
Well, when you put it like that…
Of course, it made total sense what he was saying – we needed a level of cover that didn’t just offer immediate security, but also allowed us time to adjust to our new normal without money hanging over our heads.
We ended up extending the life insurance so it covered the entire mortgage and gave us a lump sum to put towards bills and the cost of living.
There are lots of factors to consider when asking yourself, ‘How much life insurance do I need?’ Luckily, Reassured – the UK’s largest life insurance broker, is completely free to use and offers a handy online checklist to help you work out the cover that works best for you and your family.
When we did our big renovation nearly three years ago we revamped and renewed our policy. This time, with two (expensive) kids to consider, we also made sure we allowed for a generous lump sum amount, by working out our monthly outgoings, and how much we needed to maintain our lifestyle if one of us was no longer here.
It’s really important not to underestimate the role of parents who’ve chosen to stay at home. While they might not be bringing in a salary, their contribution toward childcare and the running of the household is extremely valuable.
In fact, do a quick tally and it might shock you how much it would cost if that SAHP suddenly wasn’t there to do it all for free. Full-time childcare can run into the thousands per month, while regular cleaning will set you back a couple of hundred. Then there’s all the chauffeuring, the laundry, the party planning, the homework helping…
But, even with all this extra cover, you might pleasantly surprised to discover how much comprehensive life insurance actually costs.
At Reassured their policies start from just 20p a day, so it really is a tiny price to pay for a lifetime of peace of mind.