The amount of life insurance you need depends on your personal situation, your income, number of dependents, outstanding debts, and long-term financial goals. A common starting point is to multiply your annual income by 10. For example, if you earn €40,000 per year, a cover of €400,000 may offer adequate protection. However, this should be adjusted based on your mortgage, childcare costs, and whether you want to support your children’s education.
It’s also important to account for inflation and rising living costs. A €300,000 payout today won’t go as far in 10 or 20 years. That’s why some policies offer indexation, an optional feature that allows your cover to increase each year in line with inflation, helping to preserve its real value. Your premium will also rise slightly each year.
Many policies also include conversion options, allowing you to extend or renew your policy without medical checks. For instance, if you take out a 20-year term policy, you can convert it into a longer policy near the end of the term even if your health has changed. This offers long-term flexibility and peace of mind.
Finally, if you’re taking out a joint policy, it’s worth understanding the difference between:
- Joint Life Cover – Pays out once, usually on the first death, after which the policy ends.
- Dual Life Cover – Covers both individuals separately. It pays out on the death of each person, offering two separate payouts.
Dual Life is especially suitable for non-married couples or those with children from previous relationships, as it ensures both parties are individually protected.
You can also take out a “life of another” policy, which means you own a life insurance policy on someone else’s life, typically a partner, spouse, or business associate, provided you can prove what’s called an “insurable interest” (i.e. their death would cause you a financial loss).
For example, a person might take out a policy on their partner’s life (even if they’re not married), or a business partner might insure the other partner’s life to cover debts or loss of income in the event of death. In this case, the policyholder pays the premiums and is the beneficiary of the payout if the insured person dies.
This setup can be useful for cohabiting couples, business owners, or anyone who wants financial protection linked to someone else’s life, but it’s important to get advice, as there may be tax implications depending on the structure. Read more about protecting your life insurance payout if you’re not married.
At LowQuotes, our advisors use a personalised fact-find approach to determine how much cover suits your specific situation. We also provide a free Quote Calculator to help you get an initial idea, and you can speak with our team for a no-obligation review of your existing or planned policy.