How much life insurance do I actually need?

A reasonable starting point is adding up what your family would need to clear or replace if you died, your outstanding mortgage, any other debts, and enough to replace your income for however many years your family would need it, then subtracting whatever savings or existing cover you've already got. There's no single formula that fits everyone, but that calculation gets you a realistic number to work from, rather than guessing at a round figure.

Too little cover leaves a real gap for your family to fill later. Too much means paying for more cover than you actually need. Working through the numbers properly gets you closer to the right amount than picking a figure that sounds reassuring.

Start with what needs clearing immediately

List out anything that would need paying off in a lump sum if you died: your mortgage balance, any loans, credit cards, and enough to cover a funeral. For most people, the mortgage is the biggest number here. If you've got a £220,000 mortgage outstanding, that's already most of your starting figure before you've thought about anything else.

Add what your family would need replaced

Beyond debts, think about ongoing costs your income currently covers: household bills, childcare, everyday living costs. A common way to estimate this is to take your income and multiply it by the number of years your family would need it replaced. For example, if you earn £40,000 a year and have young children, you might want that replaced for 15 to 20 years until they're more independent, which points toward a much larger figure than the mortgage alone.

Rules of thumb, and why I'd be cautious about them

You'll sometimes see a shorthand like "insure ten times your salary." It's not a useless starting point, but it treats everyone on the same income the same way, regardless of whether they have a mortgage, children, existing savings, or a partner who also earns. Two people on identical salaries can have completely different genuine needs. I'd rather work through your actual numbers with you than hand you a multiple and call it done.

Subtract what you've already got

Before settling on a final number, take off anything that would already help your family financially:

• Savings and investments that could be drawn on
• Any existing life cover, including cover you may have through work
• A pension that would pay out a lump sum or income to your family

Whatever's left after that is a much more accurate picture of the actual gap than starting from scratch.

What death-in-service cover through work usually looks like

If you're employed, you may already have some life cover through work, often called death-in-service benefit, which typically pays a multiple of your salary, commonly two to four times, if you die while employed there. It's worth finding out what you actually have, since it directly reduces the amount of personal cover you need — but it's also worth remembering it usually stops the day you leave that employer, so it isn't something to rely on long-term if you're likely to change jobs.

Level term vs decreasing term for this calculation

If you're covering a repayment mortgage, decreasing term cover, where the sum assured falls roughly in line with your reducing mortgage balance, usually matches the need closely, because the debt you're covering is shrinking too. If you're also replacing income on top of the mortgage, or you have an interest-only mortgage where the balance doesn't reduce, level term cover, which stays at a fixed amount for the whole term, is usually the better fit for at least part of what you need. If the mortgage really is the only thing you need to cover, life insurance for your mortgage walks through matching cover to it in more detail.

An example, not a rule

Picture someone with a £220,000 mortgage, a partner, two young children, and no other cover in place. They might take £220,000 of decreasing term cover to clear the mortgage, alongside a separate level term policy, or family income benefit, sized to replace a meaningful chunk of their income for the next 15 to 18 years. Someone else with no dependants and no mortgage might need very little cover, or none at all right now, and that's a fair conclusion too, not one I'll talk you out of.

If your health or circumstances are more complex

If you've got a pre-existing health condition, you're older, or your income is irregular, working out cover and getting a policy in place can feel more complicated than the calculation above suggests. None of that means cover isn't available to you — it usually just means it's worth talking it through properly rather than trying to self-assess from a generic guide. I've helped people in all of those situations get suitable cover in place.

Reviewing your cover over time

The number that fits today won't necessarily fit in five years. Having another child, moving to a bigger mortgage, a change in income, or gaining cover through a new job can all shift the real gap up or down. It's worth treating this as something you check in on periodically, rather than a figure you set once and never look at again.

Getting to the right number for you

The right amount of cover is specific to your mortgage, your family, your existing savings, and what you'd want to leave behind. It isn't a multiple you can pull from a table and trust completely. Once you know roughly how much cover you need, what actually drives the price is a separate question worth understanding too. Have a look at life insurance or get in touch below, and I'll help you work out a number that actually reflects your situation rather than a generic rule of thumb.