Deciding on the length of term: Working Example

Imagine you're 28 and married -

You have two children, aged two and four. Your partner doesn't work as they spend their time caring for the children. You have a mortgage in joint names, which is covered by a separate life insurance policy.

You become concerned that if you died prematurely your family wouldn't be able to survive without your lost income.

You and your partner decide the most important period to have the right levels of life insurance for each of you in place is when if either of you passed away your family would struggle financially - this could be until your youngest child is financially independent.

If this age is taken to be 21 then it's 19 years until your youngest reaches that age. This means your policy should be set up for at least 19 years, and possibly even a little longer to provide a small buffer zone.

Next: Should I hold my life assurance policies in trust?

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