Q. I have been meaning to get around to taking out a life insurance policy. As a married man with a non working wife and 3 young children, it concerns me that my protection is not enough.
My question is, really, how much do I need? A friend’s financial adviser recommends you take out 10 times your income as a lump sum policy. This would make the cover on the policy £1m!
What do you recommend?
A. This is a common situation. Apart from covering debt with the same figure, how do you decide how much extra cover you need?
The answer is to find a financial planner who will build you your own financial map/sat nav. This will compare all that you have against all that your family needs if you had died yesterday. They should also include any NHS benefits that you will have built up, which will be significant after 10 years in the NHS pension scheme.
The result is that you end up with the correct level of cover and you are not paying premiums for unnecessary cover for years and years. You also do not need to limit the cover chosen to lump sum benefits.
There are policies called Family Income Benefit plans which pay out a tax free income, useful for example whilst the children are dependant, and they tend to be good value.
We also notice that you were not advised to take out Wills and Lasting Powers of Attorney, and we would strongly recommend this.
