There’s no great theory behind this. Some advisers use the ‘ten times your annual salary’ approach.

But like anything linked to money, it’s personal to your circumstances and depends on your lifestage, your partner’s income, plus other investments and equity you hold.

The key is to consider your current salary or contribution and the level of income your dependants would need to maintain their lifestyle until they are fully self-sufficient. It is certainly more complex than a simple replacement salary. Many factors should be considered. The process we might take you through could include:

1. Examining your mortgage and outstanding debt, such as loans and credit cards held in your name. You would need at least enough to cover the balance outstanding.
2. Looking at your life in detail. How many children do you have? What ages are they? Will they need childcare? How much longer do they have left at school? Do they have aspirations to attend university?
3. What associated savings would there be? One car instead of two to run? Reduced energy, council tax or shopping bills?
4. Looking at your partner’s current and projected income. If they have a stable career and good income, he or she may not need as much as a partner with no income of their own.

Value yourself

Putting a price on your life is hard. The important thing is to never undervalue the personal and financial contribution you make. For example, housewives or househusbands make a significant contribution, imagine how much it would it cost to pay someone else to cook and clean as well as look after the children. If you need help, we can tailor cover to meet your individual circumstances and evolving family needs. Ask us about your options today.

We are licensed to provide advice on whole of market term products.