How much life insurance do I need?
People can over or underestimate the amount of life insurance cover they need. You will want enough protection to clear outstanding debts and provide for your family’s ongoing financial needs, but too much cover means you could be overpaying for your policy.
Use our life insurance calculator
Our calculator helps you work out how much life insurance you will need. Just answer a few questions about your finances and you’ll receive an instant result telling you how much cover you may need to ensure peace of mind and financial protection for the ones you love.
Life Insurance Cover
Our new life insurance calculator will help you work out just how much insurance you need, taking into account your current mortgage, debts, any life insurance and death-in-service benefits.
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The amount you still owe on your mortgage is the number you're after. Take a look at your most recent mortgage statement to find out what the outstanding balance is.
Think about how much each child might need per year to make sure they're looked after until they are independent. This could be when they are 18 or later if they go to university. You could include university fees in this figure.
Think about anything else that would need to be dealt with if you died. This could include funeral expenses or other unforeseen financial commitments.
How much do you owe on other debts?
Think about the total amount of any loans you have taken out, for example if you have more than one loan, then provide the combined settlement figure.
Think about the total amount owed on credit cards, for example if you have more than one card, you'll need to provide the combined balance owing.
Think about any other repayments that come out of your account each month that are not loans or credit cards. Repayments like store card balances, car loans and items bought on hire purchase, for example.
How much other life cover do you have?
If you have other life cover in place, you could reduce how much life insurance you need. We will then subtract this from the total.
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Oops! Your current cover is more than enough to cover these payouts.
Based on your numbers, you should look for a life insurance policy of at least
How to work out how much life insurance cover you need
If you have the following information, you’ll be able to get an estimate of how much cover – or the ‘sum insured’ - your life insurance policy should be for. You should also consider how long you’ll want protection for. Examples of this can be the remaining time left on your mortgage, or when your children are no longer likely to be financially dependent.
1. If you have a mortgage, how much do you still owe?
If you’re buying or own your home, make sure you have enough life insurance to clear the mortgage. Your most recent mortgage statement will give you the outstanding balance.
2. If you’re renting, what might future payments be?
You should also think about the rent due over the time you expect your family to live at the address, budgeting for rent increases.
3. How much do you owe in other debts?
You might have outstanding credit or store card balances, a car loan and items on hire purchase, for example. Your policy should be sufficient to wipe these slates clean.
4. How much do you need to leave to support your family?
Think about how much your children might need to be looked after until they are financially independent. This could include childcare costs, clothes and other expenses, such as holidays and perhaps university fees.
5. How much would you like to leave as a lump sum?
It’s worth considering anything else that would need to be paid for should you pass away. This could include funeral expenses or other financial commitments. You should also consider a cash sum for your dependants to use for everyday living expenses.
6. How much other life cover do you have?
If you already have other life cover, you can reduce how much life insurance you need. If you’re working, your employer may offer 'death in service' cover which pays out if you die. This is often set at between three to four times your annual salary.
If you subtract this figure from your total, then you’ll have an estimate for the amount of cover you might need. You’ll still need to work out how long you need protection for
Get advice on life insurance
Using MoneySuperMarket to search for life insurance allows you to easily compare policies and buy directly online. We have partnered with leading broker, Life Search, which has a dedicated MoneySuperMarket team you can call on 0800 170 1963, for any queries or support you need when making an application for cover.
You can also take a look at our useful guides, covering everything from money-saving tips to explanations on the different types of life insurance policies, to help you tackle any questions you have when searching for a quote.