You need enough cover to pay off your debts and replace your income until your family no longer depends on it; for many families that comes to 10 to 15 times annual income, but working it out properly is better than a multiple.
A simple way to work out the number:
- Add your outstanding loans, including the home loan.
- Add the big goals you would want funded anyway, such as your children's education.
- Add the income your family would need each year, multiplied by the years until your youngest is independent.
- Subtract the savings and investments you already have.
Cover through your employer usually ends when you leave the job, so do not count it as your main cover.
On how long: cover should last until your dependants are independent and your loans are paid. For many people that is around 60. After that, if your savings can support your spouse, term cover is often no longer needed. Buying it to 75 or 85 costs much more for years you may not need.
Keep insurance and investment separate. Plain term cover is the cheapest way to buy protection, and policies that mix insurance with savings usually do both jobs less well. Our insurance planning guide covers health cover too.
Your own answer depends on your income, loans, savings and when your children will be independent. If you want someone to look at your numbers, you can book a free call.