How much life insurance do I need?

When you purchase life insurance, you choose the amount of money that we pay to your beneficiary in the event of your death. This amount is called the ‘life benefit’. 

When choosing your life benefit, you should consider your circumstances. People generally think about how much their family would need to meet existing financial commitments such as debts or mortgages. Thinking about these commitments may be a useful guide to how much you should insure.  

If you select a higher life benefit, your insurance premiums will be higher. Over-insuring means choosing a life benefit that exceeds your requirements, meaning you pay more in insurance premiums than you need to. Under-insuring means selecting a life benefit that leaves your dependants short of cash when you’re gone. 

When choosing your life benefit, it can be useful to think about funeral costs, your obligations under your mortgage or rental agreements, general living expenses, and the costs of childcare and tuition. You may also want to take into account your dependants’ lifestyles. How much would they need to maintain that lifestyle in your absence?