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How much life insurance do I need?

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How much life insurance cover you need really depends on your circumstances and the type of protection you’re looking for.

Life insurance isn't a legal requirement. It's a step you can take to ensure your loved ones are provided for if you die. But working out whether you need it, and which policy is best for you can be complicated.

Here's what you should think about when working out how much cover you need.

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It depends on your circumstances and the type of protection you’re looking for. But to get a rough idea of how much life insurance you might need, our life insurance calculator could help.

Enter your details such as:

  • How much of your mortgage is outstanding
  • What debts you have
  • The income your family will need

The calculator then gives you a total life insurance cover amount. It’s only a guide but gives you a starting point to figure out which policies might be suitable.

If you've used our calculator, you might want to think about life insurance that:

  • Protects your mortgage
  • Covers additional debts
  • Provides a lump sum for your loved ones to maintain their standard of living once you’re gone

When you're buying your policy, the insurer will ask you a series of questions to find the right level of cover for you. These are based on:

  • Your current lifestyle
  • Outgoings
  • Debts
  • Financial commitments

The other key factor you’ll need to consider is how much you can afford in monthly life insurance payments. The bigger the payout, the more your family gets, but you need to make sure that your policy is affordable.

How much life insurance do I need to cover my mortgage?

Most people ensure their policy covers at least the total amount left outstanding on their mortgage, often referred to as mortgage life insurance.

Your mortgage lenders might try to sell you life cover when you take out your mortgage. But it can be worth shopping around to make sure you get the best deal.

When working out how much cover you need, check that you have sufficient cover against both capital and interest repayments.

How much life insurance cover do I need for childcare and education expenses?

Your need to make sure your policy provides a replacement for your mothly income. Particularly if your family is reliant on it.

You might also want to think about your children's school fees, for example, if your child is at private school. Further education is expensive too and university costs could be included in your list of provisions to be made.

How much life insurance cover do I need to protect my income?

To work this out, your insurer should take into account your current salary, and attempt to predict your family’s future needs.

Family income benefit policies allow your life insurance to be paid as a regular annual income, which could cover the shortfall by your loss of salary.

How much life insurance cover do I need for critical illness?

If you’re buying critical illness cover think about how much time you might need to take off from work to recuperate from serious illness. Also consider the financial pressures that may bring.

Some life insurance policies allow you to add on critical illness cover in case you’re seriously ill.

You can also choose to take out critical illness cover and life insurance separately.

How much life insurance cover do I need if I have death in service benefit?

A death in service benefit pays a lump sum if you die while still in employment.

The payout varies depending on the company you work for, but it’s usually worked out as a multiple of your salary. For instance, some firms might offer you four or five times your usual income.

You can choose the total amount you want to be insured for and how long you want the policy to last. Options include:

  • Level term life insurance - This is where the payout stays the same throughout the policy.
  • Decreasing term life insurance - This is where the total payout goes down, for instance in line with your mortgage.
  • Increasing term life insurance - These policies have a payout that goes up, often in line with inflation.
  • Family income benefit policies - This is a decreasing policy where, instead of a lump sum, your dependents get a regular monthly income until the policy expires.
  • Whole of life insurance - These policies payout whenever you die rather than being limited to within a certain time period. They tend to be more expensive than term assurance cover.


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Yes - usually when you die, a lump sum is paid out to your family. This could be used to cover any loans or outstanding debt that you might have.

You also need to think about any other loans you may have taken out, which aren’t already covered by some form of insurance. Once again, you might want to ensure that your family isn’t left with large debts to pay off in the event of your death.

It's worth telling your insurer about any outstanding debt and they may be able to factor this into the policy.

The most common life insurance policies are term policies, which means they only pay out if you die within a specified timeframe. This means you need to think about how long you want the cover to last.

It depends on why you’re getting the cover in the first place. For instance, if you’re worried about your family coping without your income, your planned retirement age might be a good place to start.

Equally, if you’re worried about the mortgage, you might want your life policy to end when it’s paid off.

Questions to consider include:

  • When is the mortgage paid off fully?
  • How old are the children and when will they finish education?
  • When are any big debts or loans paid off?
  • When was I planning to retire and will my dependents inherit my pension?

You can also consider a whole of life policy which pays out whenever you die. This kind of cover is more expensive, but gives you and your family extra peace of mind.

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