The holistic approach to life cover

When it comes to life insurance, one of the most common questions people ask is: How much cover do I actually need? While the typical rule of thumb suggests between 10 to 15 times your annual salary, the real answer depends on your unique circumstances, responsibilities, and financial goals.

Rather than picking a number out of thin air, let’s take a step back and look at the bigger picture. A well-structured life insurance plan isn’t just about covering debts; it’s about ensuring your loved ones have the financial security they need, no matter what the future holds.

What life insurance planning should cover

The right level of cover should take into account several key financial responsibilities:

• Funeral and final expenses

The costs of burial or cremation, medical expenses, and any legal fees can add up quickly.

• Mortgage or bond repayment

A mortgage or bond protection policy ensures that your home remains in the family, eliminating one of the most significant financial burdens for your dependents.

• Clearing outstanding debts

Credit cards, car loans, and personal loans shouldn’t become a source of stress for your family. Cover can be structured to help eliminate these liabilities.

• Providing for short-term financial stability

A suitable emergency fund (three to six months of salary) can give your family the financial flexibility to adjust to new circumstances without strain.

• Long-term income replacement

Whether replacing the earnings of a working parent or covering the costs of childcare and home management for a stay-at-home parent, life cover can ensure financial stability in the years to come.

Taking a holistic approach to life cover

A robust life insurance plan should consider how long the cover needs to be in place and how long it should provide financial support after a claim.

Here are a few important questions to guide your decision:

• Should cover last until your children are financially independent?
• Should it continue until you would have reached retirement age?
• Should it provide for dependents for life or a set period, such as 10 or 20 years?

These considerations will influence not only the total amount of cover required but also the structure of the policies best suited to your needs.

Life insurance isn’t just about numbers—it’s about peace of mind. Working with a qualified financial planner ensures that your cover is structured to provide the right level of protection at every stage of life, so you can focus on living fully, knowing your loved ones will always be secure.