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How Much Life Insurance Do I Need? The UK Calculator (2026)

10 min11 Jan 2026

How Much Life Insurance Do I Need in the UK?

Getting life insurance isn't the hard part. Figuring out the right amount is where most people get stuck. Too little and your family could struggle financially. Too much and you're paying premiums you don't need to.

This guide will walk you through exactly how to calculate your ideal cover amount, including a formula you can use in five minutes and a detailed breakdown for those who want precision.

Table of Contents

The Quick Formula {#the-quick-formula}

If you want a quick answer, use this formula:

Target Life Insurance = (Annual Salary x 10) + Outstanding Mortgage + (Annual Childcare x Years Until School)

For example:

  • Salary: £50,000 x 10 = £500,000
  • Mortgage: £280,000
  • Childcare: £15,000 x 4 years = £60,000
  • Total: £840,000

This gives you a solid baseline. But if you want to be more precise, or your situation is more complex, read on.

Detailed Calculation Method {#detailed-calculation-method}

For a thorough calculation, you need to consider seven key factors. Add these up to find your total need, then subtract what you already have.

1. Income Replacement

This is the big one. How many years of income should you replace?

The answer depends on:

  • Age of your children - Younger kids need longer support
  • Partner's earning capacity - Can they return to work?
  • Desired lifestyle maintenance - Essential costs vs comfortable living

Recommended years to replace:

  • Children under 5: 15-20 years
  • Children 5-11: 10-15 years
  • Children 12+: 5-10 years
  • No children: 5-10 years

Calculation: Annual salary x years to replace = income replacement figure

For a £50,000 salary over 15 years: £750,000

2. Outstanding Mortgage

Your family shouldn't have to sell the home. Include your full outstanding mortgage balance.

2026 Average UK Mortgage: £200,000-£300,000 for first-time buyers London and South East: Often £400,000+

Check your latest mortgage statement for your exact figure. Don't forget any second charges or equity release.

3. Other Debts

Include any debts that would need repaying:

  • Car finance
  • Personal loans
  • Credit cards
  • Student loans (these are written off on death, so don't include)

UK average household debt (excluding mortgage): £15,000-£20,000

4. Childcare and Education Costs

This is often underestimated. If you died, would your partner need to pay for:

Childcare costs in 2026:

  • Full-time nursery: £14,000-£16,000 per year
  • Childminder: £11,000-£13,000 per year
  • After-school club: £3,000-£5,000 per year

Education costs (if applicable):

  • Private school: £15,000-£50,000 per year
  • University support: £30,000-£50,000 total per child

Multiply annual costs by the number of years needed.

5. Funeral Costs

A practical consideration that's easy to overlook.

2026 average UK funeral costs:

  • Basic funeral: £4,000-£5,000
  • Average funeral: £6,000-£7,000
  • Premium funeral: £10,000+

Include £5,000-£7,000 to be safe.

6. Emergency Fund Buffer

Your family will need time to adjust. An extra 6-12 months of household expenses provides breathing room.

Calculation: Monthly household expenses x 12 = buffer amount

For £3,000 monthly expenses: £36,000

7. Future Goals (Optional)

Some families want to protect specific future goals:

  • University fund: £30,000-£50,000 per child
  • Wedding contribution: £10,000-£20,000
  • House deposit help: £20,000-£50,000

These are optional but worth considering if they matter to you.

What You Already Have {#what-you-already-have}

Before buying new cover, subtract what you already have:

Death in Service Benefits

Check your employee benefits. Many employers offer life insurance as a perk.

Typical death in service multiples:

  • Basic schemes: 2x salary
  • Standard schemes: 3x salary
  • Generous schemes: 4x salary

For a £50,000 salary with 4x death in service: £200,000 already covered.

Important: Death in service benefits:

  • Only pay out while you're employed there
  • End if you change jobs or are made redundant
  • May have restrictions or caps
  • Don't rely on them as your only cover

Existing Life Insurance

Do you already have any policies? Check:

  • Mortgage-linked decreasing term insurance
  • Policies from previous jobs or relationships
  • Whole of life policies started by parents

Add up the death benefits from all existing policies.

Spouse's Income

If your partner works, factor in their continued income. They won't need to replace your entire salary if they're earning too.

Adjusted need formula: Total need - Partner's annual income x years they'll work = Adjusted total

Final Calculation

Your Target Cover = Total Need - Death in Service - Existing Insurance

Using our example:

  • Total need: £1,147,000
  • Death in service (4x £50k): £200,000
  • Existing insurance: £0
  • Gap to fill: £947,000

Round up to £950,000 or £1,000,000 for simplicity.

Real Family Scenarios {#real-family-scenarios}

Scenario 1: Single Income Family, Two Young Children

Situation:

  • Main earner: £60,000 salary
  • Partner: Full-time parent
  • Children: Ages 2 and 4
  • Mortgage: £320,000
  • Death in service: 3x salary (£180,000)

Calculation:

  • Income replacement (20 years): £1,200,000
  • Mortgage: £320,000
  • Childcare (4 years full-time): £56,000
  • Funeral and buffer: £42,000
  • Total need: £1,618,000
  • Less death in service: -£180,000
  • Cover required: £1,438,000

Recommendation: £1,500,000 level term policy for 20 years

Scenario 2: Dual Income, No Children, New Mortgage

Situation:

  • Combined income: £90,000 (£50k + £40k)
  • No children
  • Mortgage: £400,000
  • No death in service benefits

Calculation:

  • Income replacement (5 years each): £250,000 + £200,000
  • Mortgage: £400,000
  • Buffer: £40,000
  • Total need: £890,000

Recommendation: Joint life policy for £450,000 each, or £400,000 decreasing term for mortgage plus £200,000 level term each

Scenario 3: Self-Employed Parent, Three Children

Situation:

  • Self-employed income: £45,000
  • Partner works part-time: £15,000
  • Children: Ages 6, 9, and 12
  • Mortgage: £250,000
  • No death in service (self-employed)

Calculation:

  • Income replacement (15 years): £675,000
  • Mortgage: £250,000
  • After-school care (8 years): £32,000
  • University fund: £90,000
  • Funeral and buffer: £45,000
  • Total need: £1,092,000
  • Partner's continued income: -£150,000 (10 years)
  • Cover required: £942,000

Recommendation: £1,000,000 level term for 15 years

Choosing Your Policy Type {#choosing-your-policy-type}

Once you know how much you need, you need to decide what type of policy.

Our Recommendation for Most Families

Combination approach:

  1. Decreasing term to match your mortgage (cheapest option for debt)
  2. Level term for income replacement and other needs
  3. Family Income Benefit as an alternative to level term if you prefer monthly payments to your family

This is more cost-effective than one large level term policy.

How Much Will It Cost {#how-much-will-it-cost}

Life insurance is cheaper than most people think, especially if you're young and healthy.

2026 Average Monthly Premiums (Non-smoker, good health):

Age£250,000 Cover£500,000 Cover£1,000,000 Cover
30£8-12£14-20£25-35
35£10-15£18-25£32-45
40£15-22£28-38£50-70
45£25-35£45-60£85-120

Factors that affect your premium:

  • Age (younger = cheaper)
  • Smoking status (smokers pay 2-3x more)
  • Health conditions
  • Family medical history
  • Occupation
  • Dangerous hobbies
  • BMI

Saving Money on Premiums

  1. Don't over-insure - Use this guide to calculate accurately
  2. Buy younger - Lock in lower rates now
  3. Stop smoking - Save 50%+ after 12 months smoke-free
  4. Improve health - Some insurers reward healthy BMI
  5. Use decreasing term for mortgage - Cheaper than level term
  6. Consider joint policies - Sometimes cheaper for couples

Common Mistakes to Avoid {#common-mistakes-to-avoid}

Mistake 1: Relying Only on Death in Service

Your employer benefit:

  • Disappears if you leave or lose your job
  • May have a cap (e.g., £150,000 maximum)
  • Isn't in your control
  • Could change without notice

Always have personal cover that follows you regardless of employment.

Mistake 2: Not Putting the Policy in Trust

Without a trust, your life insurance payout:

  • Goes into your estate
  • May be subject to inheritance tax (40% over £325,000)
  • Could take months to reach your family during probate

Writing your policy in trust means:

  • Payout goes directly to beneficiaries
  • Outside your estate for IHT purposes
  • Money available within weeks, not months
  • You choose exactly who benefits

Most insurers offer free trust forms. It takes 10 minutes and costs nothing.

Mistake 3: Set and Forget

Your life insurance needs change. Review your cover:

  • After having a baby
  • When you move house or remortgage
  • If your salary significantly increases
  • If you divorce or separate
  • Every 5 years as a minimum

Mistake 4: Insuring Only One Partner

Even if one partner doesn't earn, their death creates costs:

  • Childcare: £15,000+ per year
  • Household help
  • Reduced working hours for surviving partner

Both partners should be insured.

Mistake 5: Choosing the Wrong Term Length

Common errors:

  • Too short: 10-year policy when children are toddlers
  • Too long: 30-year policy with no mortgage or dependents

Match your term to when your dependents will be independent or your mortgage clears.

Frequently Asked Questions {#frequently-asked-questions}

Key Takeaways

  • Use the formula: (Salary x 10-15) + Mortgage + Childcare = Baseline need
  • Subtract existing cover: Death in service and any current policies
  • Don't rely on employer benefits: They end when your job does
  • Put your policy in trust: Avoids IHT and probate delays
  • Review regularly: Life changes, your cover should too
  • Both partners matter: Insure the non-earner for childcare costs

Next Steps {#next-steps}

Last updated: January 2026. This guide is for informational purposes only and does not constitute financial advice. Life insurance needs vary by individual circumstances. Consider speaking to a qualified adviser for personalised recommendations.

Last updated: 11 January 2026