Life Insurance Calculator — How Much Cover Do You Need?

A life insurance calculator should answer one question properly: if you died tomorrow, how much money would your family actually need? Not a rough multiple of your salary — the real number, built from what you owe and what your family would need to replace.

This tool adds up your outstanding mortgage, other debts, funeral costs, and enough income replacement for however many years your dependants would need support — then subtracts any existing cover, such as an employer's death-in-service benefit. What's left is a genuinely personalised cover figure, plus an indicative monthly premium across four different policy structures.

You'll often see "10 times your salary" quoted as a rule of thumb for how much life cover to buy. That's an American convention — in the UK, brokers and comparison sites more commonly suggest 5 to 7 times annual salary as a starting guide, reflecting different average mortgage sizes, state benefits and typical dependency periods.

Either way, a flat multiple is a blunt instrument. It doesn't know whether you have a £400,000 mortgage or none at all, whether your children are 2 or 17, or whether you already have £150,000 of death-in-service cover through work. That's exactly why this calculator builds your figure from your actual mortgage, debts, income and existing cover instead of applying one number to everyone.

For most people, writing your life insurance in trust is one of the easiest wins in financial planning — and it usually costs nothing extra. Instead of the payout landing in your estate, it goes directly to the people you've named as beneficiaries.

The two big benefits: it's normally outside the scope of Inheritance Tax, so more of the payout reaches your family; and it skips probate, which can otherwise delay a payout by months at exactly the time your family needs the money fastest — often paying out within weeks instead. Most UK insurers provide the trust paperwork as standard alongside the policy, so it's worth asking for it when you buy.

A joint life, first death policy covers two people under one plan but only pays out once — on the first death — after which cover ends entirely, leaving the survivor with no life insurance at all. It's cheaper than two policies, which is the appeal.

Two single policies cost more in total, but each partner keeps their own cover in force if the other dies — so if one partner passes away, their policy pays out and the survivor's policy carries on protecting them. For a young family with an ongoing mortgage, that continued protection is usually worth the extra cost.

Smokers typically pay 80–150% more than non-smokers for the same cover. Decreasing term and family income benefit are usually cheaper than level term for the same starting cover, since the insurer's total exposure falls over time. Whole of life sits far above all of these — 5 to 10 times the equivalent term premium — because a payout is certain, not conditional on dying within a set period.

You're 35, earn £35,000, have a £180,000 mortgage, £5,000 of other debts, and want 15 years of income replaced for your children plus £5,000 for funeral costs. No existing cover.

Adding it up: £180,000 mortgage + £5,000 debts + £5,000 funeral + (£35,000 × 15 years income) = £715,000 of cover needed on a level term basis — around 20 times your salary, far above the generic "5–7×" rule, because it properly accounts for 15 years of dependants' costs, not just a rough multiple.

On decreasing term matched to your mortgage, the equivalent starting premium is meaningfully cheaper since cover tracks your mortgage balance down. On family income benefit, instead of £715,000 upfront, your family would receive roughly £35,000 a year for the remaining term — often simpler for a family to manage than investing a lump sum. Run your own numbers through the calculator above to compare all four.

Official sources & further reading: read consumer guidance at MoneyHelper, check trust guidance on GOV.UK, and verify any adviser on the FCA register. Browse every tool on the mortgage calculators homepage.