How Much Life Insurance Do I Need?
Written by Check Financial · 4 min read
The short answer
There is no single right answer, but there is a clear way to think about it. Here is how we work it out with clients.
The cover you need is essentially: outstanding mortgage + income replacement for dependants + any large future costs (children's education, funeral) − existing assets and any death-in-service cover. For many UK families that lands somewhere between £150,000 and £500,000+ of life cover.
A Simple Framework
Work through these four numbers:
- What needs to be paid off? Mortgage, loans, credit cards. Add these together.
- What income needs replacing, and for how long? A common approach is your annual net household income multiplied by the years until your youngest child is independent (often 18–22).
- What one-off costs should be covered? Funeral, potential childcare, future education, or a buffer for unforeseen costs.
- What's already in place? Subtract savings, investments, existing policies, and any death-in-service benefit from your employer.
A Worked Example
A couple with two young children:
- Outstanding mortgage: £220,000
- Net household income £55,000, replaced for 15 years: £825,000
- One-off costs (funeral, buffer): £15,000
- Less existing death-in-service (4x salary on £35,000): −£140,000
Total cover needed: ~£920,000, split appropriately between the two partners and possibly across more than one policy type.
Many couples don't take the full mathematical figure, they take what fits the budget while covering the most important needs. The framework is a starting point, not a verdict.
Rules of Thumb (and Their Limits)
You'll often see suggestions like "10x your salary", these are useful as a sanity check but they ignore mortgage size, family structure, and existing cover. We always recommend working through the framework above rather than relying on a multiplier.
Should You Use Lump Sum or Income Benefit?
A large lump sum can feel reassuring but isn't always the easiest thing for a grieving partner to manage. Family income benefit (which pays a monthly tax-free income instead of a lump) is often cheaper and easier to budget around for replacing salary. Many clients combine both, a lump sum to clear the mortgage and an income to cover day-to-day living.
Real client scenario
A client initially asked for "£200,000, that sounds like a lot". After working through the framework we landed on £550,000 of combined cover (level term + family income benefit) for less than they were expecting £200,000 to cost, because we restructured the cover across policy types and approached the right insurers.
The right number is rarely the number people start with. The right structure can make better cover surprisingly affordable.
Want Help Working Out Your Number?
A short conversation usually gives a much clearer answer than any online calculator.
Talk to usCover Amount FAQs
Is there a rule of thumb for how much life insurance I need?+
Should I include my mortgage in the calculation?+
How long should the policy term be?+
Can I get too much cover?+
Should I include critical illness in the figure?+
What if my needs change later?+
Related Guides
What Is Life Insurance?
How it works, the main types of cover, and who actually needs it, without the jargon.
Read guide →Life Insurance for a Mortgage
What you actually need, level vs decreasing term, and whether to add critical illness.
Read guide →Life Insurance for New Families
The protection you and/or your family should be thinking about at major life events.
Read guide →This guide is general information, not personal advice. Check Financial Ltd is an appointed representative of Capital Protect Ltd, authorised and regulated by the Financial Conduct Authority.