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How to choose the cover sum for term life insurance
How to choose the cover sum for term life insurance

If you're unsure how much cover you need, we can help you here.

Rob Schumacher avatar
Written by Rob Schumacher
Updated over a year ago

There are many ways of determining the amount of cover you need, but as a basic rule: Any insurance is better than none if you need it.

Method 1: The basic one

In most cases 3x-5x your annual salary (before taxes) is enough money to cover all basic expenses for a couple of years and will allow your loved ones time to recover from their loss. For longer term support, 6x-10x your annual salary (before taxes) would be more appropriate.

Method 2: The detailed one

If you want to dive into more detail, then you can break up these typical components, and decide for yourself how much cover you want per component. If you are the sole earner, or you want to be on the really safe side, you should orient yourself on the upper amount while the lower amount may be more appropriate for those who are not the sole earner of the household.

Component

Lower amount

Upper amount

Mortgage

75% of mortgage cost

100% of mortgage cost

Children

10k per child per year until child is 18

20k per child per year until child is 25

Partner

3x your yearly salary before taxes

5x your yearly salary before taxes

Any debt you might have

100%

100%

From the sum here you can subtract any savings you have and any other life insurance sum you have.

Method 3: The custom one

If you're having trouble you can speak to one of our experts to learn how other people decide, as well as receive honest advice regarding your specific situation.

Our goal is never to make the decision for you, but rather to give you the information so you can make a well informed decision.

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