My Husband earns 12k a month and I earn 6k a month. We have a housing loan of 1.5million, and have two young kids. Should we each get life insurance? How much should we insure for respectively?

Hi anon,

I'm going to look at it across a few factors. This will disregard the rules of thumb, because after all, they are just guidelines.

On coverage for your liabilities and dependents(mortgage and the kids)

Ask yourself these questions:

• If either of us passes away, will I want the surviving spouse to have the loan cancelled immediately? (That'll be $1.5 million)

• If either of us passes away, how much money is needed to provide for the kids (this depends on their age and gender and the quality of life, and should work out to be easily $150K-$250K per child) if the surviving spouse is to become a single parent?

• If either of us passes away, do I want the surviving spouse to be able to quit his/her job and become a full time housewife/house-husband? (That will require money on top of the two points above)

• How much coverage do I have now?

As you can see, how much you need will be highly contingent on what your preferences are (as well as your husband), as well as what coverage you already have.

I would suggest you have a chat with your husband and explore these scenarios.

On coverage for your bills if you become too ill to work (critical illness coverage)

Ask yourself these questions for a start:

• How much expenses does each parent spend? (Personal and contribution to the house hold, as well as the mortgage) Take that and account for five years worth of expenses

• How much money do I think I will need for treatment not otherwise covered by my shield plan?

Again, you should have a chat with your husband to look at the numbers.

Once you have some numbers in mind, that will help you frame how much coverage you would need.

The goal is to insure for your needs based on what you want.

Good luck!

Definitely. As long as you're employees and are reliant on salaries, insurance is important in the unfortunate event either of you lose your jobs but still have expenses to upkeep.

A rule of thumb for life insurance is coverage of 10x your annual salary, so about $1.4mil for your husband and $720k for yourself.

You might also want to consider other forms of insurance as a form of safety net for your family:

Critical Illness + Early CI: 3-5x annual salary

Disability: Yes

Personal Accident: 4x annual salary

And another rule of thumb, try to keep total annual premium at less than 10% of total annual salary.