I Don't Need Life Insurance - I'm Going to Live Forever!

Have you ever watched that 70’s TV series "Greatest American Hero"? It’s about a guy who has a super hero suit delivered from aliens which allows him to fly and have other useful super hero powers. This had a great theme tune with the chorus line ringing out "I'm gonna live forever...I'm gonna learn how to fly -high!"

This song captures how many of us feel when we are younger but the truth is that as time goes by the we realize that our time on earth is limited. I think only realised I was mortal when I turned 25. It wasn’t like a light bulb went on it was more a dawning sense of reality. Some of my friends are still risking their necks bungee jumping and white water rafting but I stopped thrill seeking when the impending sense of doom joined me at 25. Now, you may believe that you will get another chance at life and return in some other corporeal form but as far as I’m concerned I can't remember that I had a past life so I like to work on the presumption that I only get one shot.

What happens if I die? I don’t really like to dwell on is as I think that that I am pretty lucky in life. I’ve never had broken a bone or a cavity and I for the most part have had good health. National statistics tell me that I have a good chance of turning 80 years old. Some internet site like the "Death Clock" tell me that I may live to be 103. Trouble is I now have a home and mortgage, children who need me and I now know that I can’t live forever. In some cultures the concept of life insurance is quite foreign. In Polynesian culture past and present children will be looked after by extended family with no questions asked. Our Western family structure isn’t so flexible and while I like to think that my children would not go uncared for if I was to die without life insurance they could be put at a disadvantage. So life insurance is the solution I have opted for.

In shopping for life insurance you need to decide on the right amount of cover. It is about as important as deciding to get insurance in the first place. If you don’t provide enough cover then the beneficiaries may not have enough to live comfortably. On the flip side providing too much cover can end up being expensive for you month to month.

HOW MUCH COVER? The Quick Answer.
If you are looking for quick answers, don’t have a lot of time and are not worried about details. Some like to use the rule that the sum of cover should be 10 times your annual income. This is supposed to leave enough for your family to be comfortable. However this doesn’t account for debts that you might have, inheritance taxes and other costs.

So, if you are serious about providing the right amount of cover then you will need to sit down and look at some figures.

The Serious Answer.
To work out a figure for cover it shouldn't take too long. You will need to consider the points below.

1. How much will your funeral cost?
You don’t have to make full arrangements but you should consider providing a sum to cover the costs of your funeral. A guide to funeral costs can be found online at WhatPrice.co.uk.

2. Debts
Do you have a loan, mortgage or big bills? You also can consider inheritance tax which will impact the final sum which your beneficiaries receive. If you are unmarried and have an estate more than £275,000 inheritance tax is very steep.

3. Living
How much per month will your beneficiaries need to get by? You can consider how much income a working partner could contribute and put this against the monthly costs of running the house hold. If you have savings you may want keep these to cover unexpected bills or repairs to the estate.

Have a think about how long your beneficiaries will need support for? The term/length of your life insurance policy will affect what your premium will be. If you have small children you might want to support them until they have completed school or higher education. or if you have a non working partner then providing support for them for as long as they might need it.

4. Assets
If you have assets in your name will you sell them to raise cash for the your surviving family or is it better to hang on to them?

If you consider the points above you will go a long way to providing the right amount of cover and hopefully not be landed with a very expensive premium.