Life insurance can provide invaluable financial protection for your loved ones in the event that you die, but it isn’t always easy to work out exactly how much cover you need.

Not only must you think about ensuring your outstanding debts would be paid off, (including your mortgage, credit cards, overdrafts, hire purchase arrangements and any other loans), but also how much cover you might need to pay for things such as childcare, school fees or higher education costs. And that’s all before you think about utility bills, rates and day-to-day living expenses.

The same issues arise if you are unfortunate enough to experience a Critical Illness and it is also possible to insure yourself against this.

Affordability is a major factor, as the bigger the pay-out you want, the higher your premiums will be. If affording the premium leaves you struggling to cope financially, you’ll have to reduce the level of cover you take out.

By Darren Mills, Abacus Wealth Management