How much life insurance cover do you actually need?
A practical way to calculate your life cover amount, based on obligations, the income that needs replacing and the family's goals.
The most common question about life insurance is the wrong one. It isn’t “how much does it cost”, but “how much cover do I need”. If the second is answered properly, the first is almost always smaller than you imagine.
The logic is simple: the sum insured has to cover everything that would stop being paid if your income disappeared tomorrow.
The four parts
1. Obligations to be cleared. Mainly the outstanding mortgage balance, so the family keeps the home free of charges. Add any consumer or business loans where you’re a co-borrower.
2. Income replacement. Your annual net income times the years the family needs to adjust, usually 7 to 12. Example: €18,000 a year × 10 years = €180,000.
3. Future goals. Mainly the children’s education. Estimate realistically: school, tutoring, university in or outside Greece.
4. Immediate costs and loose ends. Funeral costs, inheritance tax, settling obligations. €15,000–€25,000 is a reasonable base.
What you subtract
From the sum of the above, subtract:
- Your existing savings and investments
- Any group life cover from your employer (remember: it stops if you leave)
- Assets that could be liquidated without hurting the standard of living
What’s left is the gap, and that’s what you insure.
An indicative example
A couple, two children aged 6 and 9, a mortgage with a €120,000 balance:
| Part | Amount |
|---|---|
| Outstanding mortgage | €120,000 |
| Income replacement (10 years) | €150,000 |
| Two children’s studies | €60,000 |
| Costs & loose ends | €25,000 |
| Total | €355,000 |
| less savings | −€40,000 |
| Sum insured | ≈ €315,000 |
Term or whole-of-life?
For this purpose, term life insurance is almost always the right choice: it gives the maximum sum at the lowest premium, for the period when the risk is greatest (while the children grow up, while the loan runs). You add whole-of-life only if there’s a legacy goal or tax planning.
The sum isn’t static. Review it at every big change: a new child, a new loan, a significant rise or fall in income.
This article is for information only and is not personalised investment, insurance or tax advice. Always confirm the terms and tax treatment for your own case.