How much life cover might I need?

Start with

Your family’s needs

Then subtract

Usable resources

Choose a term for

How long help is needed

Review after

A major life change

Start with what your family would need

There is no single amount of life cover that suits every household. The purpose is not to produce the largest possible number. It is to identify the financial gap that could be left if you died during the years when somebody relies on you. MoneyHelper suggests considering debts, mortgage payments, living costs, childcare and education when deciding how much cover may be appropriate. [1]

Begin with a simple question: what would you want the money to make possible? One family may want the mortgage cleared so the surviving parent can remain in the home. Another may be more concerned about replacing several years of income, paying for childcare or allowing a partner to reduce their working hours. Someone with no dependants may need much less cover, although they might still want to address a shared debt or funeral costs.

Think about financial contribution broadly. An unpaid caregiver can have a substantial protection need even without a salary, because replacing childcare, school runs, household management or care for a relative could cost money. The calculation should reflect what would have to change in your household, not simply the income shown on a payslip.

Add the main building blocks

A needs-based estimate usually becomes easier when you divide it into separate jobs. Record each figure in today’s money and note where it came from. Mortgage statements, loan balances, recent bank statements, workplace benefit documents and pension information are more dependable than memory. The MoneyHelper budget planner can help organise regular income and spending before you decide how much of that spending would continue. [2]

For the mortgage, decide whether you want to clear the whole balance or merely help with payments for a period. A repayment mortgage falls over time, so decreasing term cover may be considered for that specific debt. Level cover keeps the same payout and can be easier to align with wider family needs. Check the policy assumptions carefully: remortgaging, extending the mortgage term or changing the interest rate can cause a decreasing policy and the actual balance to move differently. [3]

For living costs, work from the amount the household would still need rather than replacing gross salary pound for pound. Some costs may fall, while childcare, transport or paid help could rise. Decide on a support period—for example, until the youngest child reaches an age you choose—and multiply the annual gap by that period. This is a planning model, not a prediction: inflation, investment returns and family circumstances can all change.

Include debts only after checking what happens on death. A debt in one person’s sole name is normally dealt with by their estate, while joint debts generally remain the responsibility of the surviving borrower. The estate pays debts before beneficiaries receive what remains. If the estate cannot pay everything, the exact outcome depends on the debt, ownership and any security attached to it. [4]

Subtract existing protection and resources

Once you have added the needs, subtract resources that would genuinely be available to meet them. These might include accessible savings, investments intended for family protection, an existing personal policy and death-in-service cover from an employer. Do not automatically include money earmarked for another essential purpose, or assets that the family would be unwilling or unable to sell.

Workplace death-in-service benefit is valuable, but it is linked to the employer’s scheme rules and usually ends when you leave that job. Check the current benefit, who you have nominated, and whether the scheme trustees retain discretion over payment. MoneyHelper notes that workplace life cover may not be enough for all of a family’s needs, and changing jobs can remove it. [5]

Pensions can also provide benefits after death, but the rules vary by scheme and by whether you die before or after taking benefits. Ask each provider what could be paid, to whom, and whether an expression-of-wish form is current. Pension Wise explains that beneficiaries and tax treatment can depend on the type of pension, your age at death and how benefits are taken. [6]

Be cautious about counting the family home as a resource if your aim is to help your family remain there. Likewise, do not assume a surviving partner can maintain exactly the same income while taking on all caring responsibilities. The point of subtracting resources is to avoid unnecessary duplication without quietly removing the protection you intended to create.

A worked example

The following example demonstrates the arithmetic only. The household, amounts and support period are invented and are not typical figures or a recommendation. A real calculation should replace every line with evidence from the family’s own statements and budget.

A salary multiple can be a quick sense-check, but it can hide important differences. Two people earning the same salary may have very different mortgages, ages of children, savings, childcare arrangements and partner incomes. The worksheet makes those assumptions visible. It also lets a couple calculate each person separately: equal cover is not automatically right when their financial and unpaid contributions differ.

Choose how long the cover should last

The amount and the term belong together. Cover intended for a mortgage might follow the remaining mortgage term. Family-income cover might last until the youngest child reaches an age you have chosen, completes education, or is likely to be independent. Cover for a time-limited business loan should reflect that liability instead. A longer term normally means the insurer covers you into older ages and can therefore cost more. [1]

Different needs can end at different times. One approach is to layer policies: perhaps decreasing cover for a repayment mortgage and level cover for family support. Another is one level policy sized for the combined need. Layering can track the plan more closely, but it creates more policies to maintain. One policy is simpler, but may leave more or less cover than needed as circumstances change.

Affordability matters. A policy that looks comprehensive on paper is not useful if premiums cannot be maintained, because cover normally ends when payments stop. Compare the protection goal with a monthly amount that remains manageable if other household costs rise. The Financial Conduct Authority requires firms to act to deliver good outcomes for retail customers, including support and fair value, but the personal budget decision remains yours. [7]

1. Gather the evidence

   Use current mortgage, debt, savings, workplace and pension documents rather than estimates from memory.

2. Write down each protection goal

   Separate clearing debts, replacing spending, paying for care and any other chosen commitment.

3. Set a time horizon for each goal

   Record when the mortgage, dependency or other need is expected to end.

4. Subtract verified resources

   Include only assets and existing benefits that would be accessible and appropriate to use.

5. Stress-test the result

   Ask what changes if costs rise, a partner works fewer hours, or workplace cover disappears.

6. Keep the premium sustainable

   Choose cover you can reasonably expect to maintain, and understand what happens if payments stop.

Review the estimate when life changes

A calculation is a snapshot. Revisit it after having or adopting a child, moving home, remortgaging, separating, marrying, changing jobs, taking on care responsibilities, receiving an inheritance or seeing a major change in income. Also check it periodically even when nothing dramatic happens, because debts fall, savings move and children become less dependent.

Do not cancel an existing policy merely because you are considering a replacement. Age and health changes can affect the terms available on a new application, and the new insurer may not accept it. Keep existing cover in force until any replacement has started and you have checked its documents. When applying, answer every question carefully: the Consumer Insurance (Disclosure and Representations) Act 2012 requires consumers to take reasonable care not to make a misrepresentation. [8]

Finally, consider who should receive the money. A policy written in trust can allow trustees to pay chosen beneficiaries and may keep the proceeds outside the estate, but trusts create legal and tax consequences and can be difficult to change. HM Revenue & Customs explains that different trust types are taxed differently. Use the insurer’s documents carefully and obtain advice where the family or estate arrangement is not straightforward. [9]

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