When deciding how much life assurance you need, you should do your calculations carefully and take all the necessary factors into account. If you do not, your family may face destitution or having to reduce their standard of living after your death.

Your financial plan should include a death plan in which you consider the financial wellbeing of your family if you were to die. Your financial plan should be based on your current financial situation.

• You need to calculate how much money your estate will need to settle your outstanding debts.
• You need to accommodate for liabilities that may arise from your death i.e. funeral costs, estate duty, your family's living expenses.

Upon your death, your bank account will be frozen for at least three months. Your family will need money for their living expenses.  If you had a "clean" death, your life policy will pay the beneficiary within a month of your death. (It is important to nominate a beneficiary on your life policy). If a beneficiary has not been selected, the money from your life policy will be paid into your estate, where it will be frozen until your estate has been wound up.

The Law regards the tax man as your estate's first creditor, followed by the banks. Your spouse is usually at the bottom of the list.

Consideration should be taken for your family's needs, which should include  provision for children's education, lifestyle expenses, etc. If you can't afford life assurance to cover all your family's financial needs, you will need to take out as much life assurance you can afford and discuss with your spouse how any shortfall should be handled.

If you miscalculate your life assurance cover, and there is a shortfall, your family may need to make certain lifestyle sacrifices.