How much life insurance cover do you need?

Find out how to work out the amount of life insurance cover you need, use our calculators, or speak to fee-free, impartial advisers.

Key points

  • Choosing too much or too little life insurance cover can lead to significant problems
  • A typical rule of thumb is to consider 10 times the salary of the main wage earner, but there are simple steps to take to reach a more accurate figure
  • Life insurance calculators are a step towards this
  • Speaking to a financial adviser such as's partner LifeSearch[1] gets you the opinion of an expert able to factor in the things relevant to your particular situation

One of the most common and burning questions for anyone looking to arrange life insurance is 'how much cover do I need?'

The question is of vital importance; too little cover could leave your family in hardship at the most difficult of times, too much cover will mean you're paying more in premiums than you need to.

Unfortunately, as with many questions people are desperate to be given the solution to, the answer isn't straightforward.

That's because the amount of life insurance cover you need will be directly and inextricably linked to your individual circumstances.

An extremely rough rule of thumb could put the amount of cover you need at about 10 times the earnings of the person with the highest salary in the household.

Such a guess-timate would be based on a 'typical' nuclear family and may be designed to maintain the family's lifestyle and to cover the mortgage and other essential outgoings until dependant children are old enough to fend for themselves.

But as so few households and situations are 'typical', this best guess is unlikely to be the right way to decide on the cover you need from one of the most important financial products you can buy. Consider these other options…Credit cards and calculator

Use a life insurance calculator

Free life insurance calculators are common online tools and you'll find one to use if you compare quotes through Our calculator will ask:

  • How much of your mortgage is left to pay off?
  • How much would be required to pay off loans, debts, credit cards and other expenses (remember to factor in the cost of a funeral)?
  • What's the value of any other life cover or investment policies you have that would pay out at your death?

On top of this you'll be asked how much you'd like to leave to your dependants to cover bills, essential outgoings and day-to-day life.

An adviser will be able to take into account things such as age, health conditions, individual family circumstances and the exact things you want to cover

When you decide this, in order to compare it to your annual income you should try dividing the figure by the number of years the policy runs for.

Based on the figures you've provided, a calculator can then give you an estimate of an appropriate level of cover.

But remember that, as with the 'rule of thumb' method described above, a calculator offers a standardised set of figures based on 'typical' circumstances and may not, for example, factor in things such as age or health conditions.

What's more, it will only be as accurate as the figures you enter and it's all too easy for you to under- or over-estimate the cover you need.

For such an important decision it's certainly worth considering turning to expert advice…How to get the right life insurance

Financial adviser

Unlike the methods described above, choosing to use a financial adviser can get you access to an expert's opinion that's tailored to your individual circumstances.

An adviser will be able to take into account things such as age, health conditions, individual family circumstances and the exact things you want to cover.

They'll be able to factor in other policies you may already have in place, such as income protection insurance, critical illness cover, benefits associated with your job, pensions, savings and investments.

They can also help you with more technical aspects such as writing life insurance in trust.

Finding the right financial advice can be difficult to get right and if you want independent financial advice, you'll have to pay for it.

For a product such as life insurance many people use fee-free, restricted advisers. These are impartial, but not independent; they can accept commission from providers for the products they recommend.

It's worth periodically reviewing the life protection cover you have in place's partners LifeSearch[1] can give you such advice which you can get by requesting a call back through our main life insurance landing page, or by calling 0800 072 1145.¥

Review the cover you need

Remember that the amount of life cover you have won't remain the same throughout the course of your life.

People typically require less cover as they pay down mortgages and other debts and as their children grow older, but it can work the other way if, for example, you have more children, or move to a more expensive house.

Also remember that if you've been relying on employee benefits for elements of your life cover you'll probably lose these benefits if you leave your job, or if you lose it.Life insurance

It's worth periodically reviewing the life protection cover you have in place. If you think it needs to change, consider speaking to a financial adviser and/or your current provider.

When you shop for other forms of insurance such as car and home, it's always a good idea to shop around and, perhaps, switch providers, but this won't necessarily be the case with life insurance.

Increased age and deteriorating health can have a major impact on life premiums, meaning that if the level of cover you need changes you may want to make the necessary adjustments with your current insurer, or even consider multiple life policies.

By Sean Davies