There is no single right figure. Three simple methods give a starting range that you can refine with your own loans, dependants and goals.
The short answer: add up what your family would need if your income stopped, then subtract the cover and savings they already have. A common rule of thumb is a multiple of annual income, but it is only a starting point. Insurance is the subject matter of solicitation.
Method 1: Income replacement
Estimate how many years your family would need support, multiply by the annual amount they would need, and adjust for expected rises in costs. A younger person with young children generally needs more years of support than someone close to retirement.
Method 2: Needs-based
List the loans to be cleared, such as a home loan, the cost of future goals such as a child's education, and the living costs of the family for a set period. Add these up and subtract existing cover and liquid savings. This method is more work but uses your actual numbers.
Method 3: Rule of thumb
Some people use a multiple of annual income as a quick check. Treat it as a sanity check only, because it ignores loans, dependants and savings.
Review it when life changes
A new loan, a child, a marriage or a change in income each changes the figure. Cover that was enough five years ago may not be today. The insurance needs calculator on this site works from your own numbers, and Menka Motwani can go through the result with you.
Insurance is the subject matter of solicitation. This article is general information, not a recommendation. Rules and rates change, so check the current position with the regulator or lender.
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