There is no limit on the amount of life assurance you can take out, use your current earning as a guide.  So, if you have a family, generally you should calculate the amount of cover you need by taking your annual salary and multiplying it by ten or twenty. However this does not take account of individual personal circumstances and so could leave you either over or under insured.

A more accurate method should include the liabilities you might leave, including Inheritance Tax. However, Inheritance Tax is not payable if your estate passes to your spouse, or on estates valued below £242,000 (2001-2002 tax year).  Many people would be surprised to find their estate is above this level, so it pays to sit down and look at your assets carefully.

The cover should also be able to repay any mortgage if necessary as well as other outstanding loans. It could also be used to provide a future income for the partner, or to pay ongoing expenses such as childcare.

Remember to offset existing cover can be set against this amount, for example life cover in a company or personal pension plan. Bear in mind that not all company pension schemes recognise unmarried partners as entitled to death benefits.

Of course, the amount of cover will need to be reviewed from time to time, to take into account any changes in personal circumstances.

 This site contains general material and is not intended to give financial or other professional advice.
If expert advice is required, please seek the services of a qualified professional.   

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