How much life insurance cover do you need?
If you have a mortgage, children or other people who depend on your income, life insurance can help provide financial support if you die.
Our free UK Life Insurance Calculator helps you estimate how much life cover your family may need. It considers your income, mortgage and other debts, children’s costs, funeral and estate costs, existing life cover, and savings available to your family.
This can help you answer an important question: how much life insurance cover might my family need?
The result is an illustration rather than a recommendation. The right level of cover will depend on your family’s circumstances, financial commitments and existing sources of income and protection.
How much income should life insurance replace?
If your family relies on your income, replacing some or all of that income may be an important part of your life insurance needs.
The amount and period will depend on your circumstances. For example, a family with young children may need income replacement for longer than a household where children are already financially independent.
Your partner’s income, savings and other sources of financial support can also affect how much cover is required.
There is no single income multiple that works for everyone, so it can be useful to look at your actual household spending and future financial commitments.
Should life insurance cover my mortgage and debts?
Your mortgage may be one of the largest financial commitments your family would have to deal with if you died.
You can include your outstanding mortgage and other debts, such as personal loans or credit cards, in the calculator. This helps estimate how much additional money your family might need to clear those commitments.
Whether you want a policy to cover all of these debts will depend on your wider financial position and the type of cover you choose.
How much life insurance do I need for my children?
Children can create significant long-term financial commitments, particularly if you want to allow for education, private schooling or other costs until they become financially independent.
The calculator lets you enter the number of dependent children and an estimated cost of supporting each child.
Your actual costs will depend on your family and the choices you expect to make. You may also want to consider how your children’s needs could change as they get older.
What if I already have life insurance?
You may already have some life cover through your employer or an existing personal policy.
Death-in-service benefits can form part of your overall protection, but they are linked to your employment and the amount of cover can vary between employers.
The calculator allows you to include existing personal and employer life cover, along with savings and investments that could be available to your family. This helps estimate any additional cover you may need.
It’s also worth checking whether existing employer cover would continue if you changed jobs.
What type of life insurance do I need?
The type of cover you need will depend on what you are trying to protect.
Term life insurance provides cover for a specified period. This can be used to protect a mortgage, replace income while children are dependent or cover other financial commitments during a particular stage of life.
Whole-of-life insurance is designed to provide cover for the rest of your life, subject to the policy terms and premiums being maintained. It can be used for different planning purposes, including some estate planning situations.
The amount and type of cover are separate decisions, so it can be useful to consider what you want the policy to achieve before choosing a policy.
Should I speak to a financial adviser about life insurance?
A life insurance calculator can help you understand how much cover your family may need, but it cannot account for every aspect of your circumstances.
A regulated financial adviser can help you consider how life insurance fits alongside your mortgage, income, savings, pensions and wider financial plans. They can also help you understand the different types of cover available and how factors such as policy terms, exclusions, premiums and trusts could affect your protection.
Before taking out cover, it can be useful to consider not just the amount of insurance you may need, but also the cost of the policy, how long you need the cover for and what would happen if your family’s circumstances changed.
If you would like help assessing your options, you can use the Trusted Advisor adviser matching service to find a regulated financial adviser suited to your needs. Alternatively, email our team at hello@trusted-advisor.co.uk and we can help you understand the next steps.