The basic idea behind age-dependent multiples which decrease with age:

• Income usually increases over time
• The multiple for life is directly correlated to the remaining amount of time the insured would be actively working
• Younger people have not had time to save as much, therefore there is a higher need for insurance cover
• Insurance should compensate not enrich:
  • Life cover: The standard of living for a family should be ensured for several years, taking into account that the remaining spouse might want to stay home to take care of younger children or that they may need time to find a job
  • Disability cover: The standard of living should be ensured; however, there should still be an incentive to return to work. The applicant should not be financially better off if they were to stay at home.

The following multiples of annual earned income are recommended as maximum sums insured:

Important considerations regarding the accumulation of covers

Taxation of disability products: If the insurance benefit is not taxable, we recommend using a lower multiple.

Depending on market needs, products, and strategy, many companies are using their own multiples. They should be discussed with and confirmed by your local Gen Re office.