Ask Harvin #4: How much Life Insurance Coverage do I need?

Published 19 Mar 2022

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By Fi Life Team

Once you have determined that you have financial dependents and you need life insurance to ensure the continued financial well-being of your loved ones should anything happen to you, the next question I often get is , “How much coverage do I need?”.

The amount of coverage you need will depend on how much money your family needs in your absence. To determine this, you need to add up the following:

  1. Amount of living expenses your family needs

    Find out how much money your family needs each month to maintain their current lifestyle. You can either track your receipts or simply refer to your bank statements. For now, do not include your mortgage or car loan payments, we'll calculate that separately later. Multiply this monthly figure by 12, and that’s your family’s annual expenditure.

    You then need to estimate the duration your family will require financial support before they are able to be financially independent. If you have young children, this duration might be as long as 20 years. Then multiply out your annual expenditure by this duration and you will get an estimate of how much your family will need for their living expenses.


    • Your family’s monthly expenditure is RM3,000 per month (or RM36,000 per year)
    • Duration when your children/spouse become financially independent is 20 years

    Then you need RM36,000 per year X 20 years = RM720,000 sum assured.

  2. Amount of all outstanding loans, including your mortgage and and car loans

    If you have any big loan obligations like mortgage or car loans, do not leave this burden to your spouse to pay off on her own. Make sure your life insurance coverage amount includes a sum to pay off all your loans should you pass away.

    Do note that many banks require you to take up insurance called MRTA that will pay off your mortgage if you die. If you do have an MRTA that covers the full amount of your mortgage, then you do not need to include your mortgage amount in your life insurance coverage.

  3. Amount needed for your children’s education

    Finally, if you have school-going children, estimate how much their education will cost, from primary right up to university. You can easily get estimates online. So if you have plan to send your kids to private schools or overseas, do include this in your coverage amount.

Once you have added all the estimates above, you will have the amount of life insurance coverage that you need.

If this sounds like a lot of work, the Fi Life team has developed an online calculator that can help you with this. You can try it out here!

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Yours truly,
Harvin Sidhu

Certified PCEIA (Pre-Contract Examination For Insurance Agents), CEILI (Certificate Examination In Investment-Linked Life Insurance) and TBE (Takaful Basic Examination)

Editor’s Note: Fi Life offers term life insurance for up to RM1 million and 30 years of cover. Please visit for an instant quote.