Protecting Your Family

This is a far more complex area. The following could be used as a guide.

How much of your income would your partner/family require if you were to die. Remember that items such as a mortgage/loan might be paid for with other life cover. Work out what your outgoings should be in the eventuality that you have died (remember that you are no longer there, so are not a cost to your family).

Once you have your outgoings, including all items such as food, clothing, etc. work out how much you would want on top of that as a buffer. This should provide you with an annual amount required.

As a rough guide, you £100,000 invested at a 5% interest rate, would provide an annual income of £5000. This applies if you did not wish to use the initial capital investment. The amount required for cover would be less, if you were to use the capital and interest over a predetermined period of time. (assuming a 6% investment return and a 3% inflation rate, approximately £77000 would provide the same income over 20 years).