How Much Cover Do I Need?

Written and reviewed by Kris Dabner, Chartered Financial Planner. Last reviewed October 2026.

How to read these figures

These figures estimate the cover your household might need, based on what you entered. They are a general guide, not a recommendation, and the right amount and type of cover depend on your circumstances.

The calculator does not know what you already have. Employer benefits such as death in service cover and sick pay, existing policies, savings, and any state support all reduce the gap you need to insure. How a policy is set up also matters, including whether it is written in trust so it pays out without waiting for probate.

Life insurance, critical illness cover and income protection solve different problems, and most households do not need the maximum of all three. Our insurance and protection advice page explains how we work out which matters most.

How much life insurance do I need?

Enough to clear your debts, pay for a funeral, and replace the household spending your income pays for while your family depends on it. The right figure comes from your own numbers rather than a multiple of salary. The calculator above builds it like this:

• Debts: your outstanding mortgage plus any loans, credit cards or car finance.
• Final expenses: a budget for the funeral and legal costs.
• Family spending: ten years of your household’s living costs, excluding the mortgage.
• Minus: any death in service benefit from your employer.

Ten years is a rule of thumb, not a fixed answer. If your youngest child is a baby, your family may need support for longer than that; if your children are teenagers, for less. The suggested term runs until your youngest dependant turns 21, or until you retire if that comes first.

Why not just use ten times your salary?

Multiples of salary are quick but blunt. Two people on the same salary can need very different amounts: one with a large mortgage and three young children, the other renting with grown up children. Building the figure from debts and spending gives a number that fits your household, and shows which part of the cover is doing which job.

A worked example

Illustration only. A 38 year old earning £45,000, with two children (the youngest is 4), a £220,000 mortgage, £8,000 of other debts, family spending of £2,500 a month excluding the mortgage, a £5,000 funeral budget, three months of full sick pay and death in service cover of four times salary. Entering these figures in the calculator gives:

• Life insurance: £353,000 over 17 years. That is £220,000 + £8,000 + £5,000 + £300,000 (ten years of spending), minus £180,000 of death in service.
• Critical illness cover: £288,000. The mortgage, other debts and two years of family spending.
• Income protection: £2,250 a month. Around 60% of gross income, starting after 13 weeks so it follows on from three months of employer sick pay.

Two things are worth noticing. Death in service usually only pays while you work for that employer, so changing jobs can open the gap up again. And the calculator does not use your partner’s income or your savings; both can reduce what you need, and an adviser would take them into account.

How much critical illness cover do I need?

Critical illness cover pays a tax free lump sum if you are diagnosed with one of the serious illnesses the policy lists, such as many cancers, heart attacks and strokes, and meet its definition. It is there to give you time and choices while you recover.

The calculator suggests enough to clear your mortgage and debts plus two years of family spending, which reflects a typical period of treatment, recovery and adjustment. Some people choose a smaller sum that gives breathing space rather than clearing the mortgage, to keep the cost down. Critical illness cover can be added to a life policy, often for less than two separate policies, but a combined policy pays out only once, on whichever claim comes first.

How much income protection do I need?

Income protection pays a monthly income if illness or injury stops you working, until you can return to work, the policy ends or the benefit period runs out. Insurers usually limit cover to roughly 50% to 70% of your gross income, which is why the calculator uses around 60%.

The deferred period is how long you wait before payments start. Matching it to your employer sick pay avoids paying for cover you would not use: if your employer pays you in full for three months, a 13 week deferred period usually makes sense, and a longer deferred period lowers the premium. If you are self employed with no sick pay, a shorter deferred period or a larger emergency fund matters more.

Statutory Sick Pay and state benefits are far below most household budgets. Our budget planner shows what your household actually spends, and our guide to income protection explains why it is the cover most families skip.

Which type of life insurance?

• Level term: pays the same amount whenever you die during the term. Suits family protection and interest only mortgages.
• Decreasing term: the payout falls roughly in line with a repayment mortgage, so it usually costs less than level cover. It is designed to clear the mortgage, not to provide for your family’s living costs.
• Family income benefit: pays a regular income from a claim until the end of the term, instead of one lump sum. It is often a cost effective way to cover the family spending part of the calculation, and to cover it for the full term, because the total amount at risk falls each year.
• Whole of life: pays out whenever you die, so a claim is certain. Premiums are higher, and it is mainly used to leave a set sum or to help pay an inheritance tax bill.

Life insurance over 50 and over 60

Later in life the question usually changes. Children have often left home and the mortgage may be small or repaid, so the need to replace a working income can fall away. What often remains is:

• making sure a partner can manage on one set of pensions, especially where a pension stops or reduces on death;
• covering funeral costs and any remaining debts;
• helping your beneficiaries pay inheritance tax, particularly as most unused pension funds are due to count towards estates from April 2027.

Guaranteed acceptance over 50s plans ask no medical questions, but the payout is usually modest, there is often a waiting period at the start, and if you live long enough you can pay in more than the plan pays out. Fully underwritten term or whole of life cover can give better value if your health allows. For inheritance tax, see our estate planning and inheritance tax advice and our guide to the April 2027 pension changes.

Write it in trust

Life insurance payouts are normally free of income tax and capital gains tax, but a policy that is not written in trust usually forms part of your estate. That can delay the payment until probate is granted and may add to an inheritance tax bill. Writing a policy in trust lets the money reach the people you choose more quickly and normally keeps it outside your estate. Most insurers provide trust forms at no extra cost, and we help clients choose the right type of trust.

What affects the cost?

Premiums depend mainly on your age, health, smoking status, occupation, the amount and length of cover, and whether premiums are guaranteed or reviewable. Taking cover out earlier generally costs less. Answering the application questions fully matters too: undisclosed health information is a common reason for claims being reduced or declined. As an independent firm, we compare insurers on their policy definitions and claims record as well as price.

Frequently asked questions

Do I need life insurance if I have no children?

Often less, but it can still matter if someone relies on your income, if you share a mortgage, or if you want to cover funeral costs. If nobody would be left with debts or a drop in income, you may not need it at all.

Do I need life insurance if I have death in service cover?

Death in service is valuable, but it usually only lasts while you work for that employer and is often two to four times salary, which may not cover a mortgage plus years of family spending. Treat it as part of the total, which is how the calculator uses it.

Should we have a joint policy or two single policies?

A joint policy is usually cheaper but pays out once, on the first death, and then ends. Two single policies cost a little more, could pay out twice, and are easier to split if your circumstances change.

How long should my life insurance last?

Long enough to cover the years your family would rely on your income and, for mortgage cover, until the mortgage is repaid. The calculator suggests a term that ends when your youngest dependant turns 21 or when you retire, whichever comes first.

Is a life insurance payout taxed?

Payouts are normally free of income tax and capital gains tax. Unless the policy is written in trust, the payout may count as part of your estate for inheritance tax.

Can a financial adviser help with life insurance?

Yes. An independent adviser can compare the whole market, work out how much and what type of cover you need, help with the application and set up the trust.

Want a second opinion on your figures? Our life insurance and protection advice page explains how we work, or you can book a free initial call.