How much life insurance do you need?

How to work out how much life insurance you need: two approaches

Below we’ve provided two different ways of thinking about how much cover you might need. One is a quicker estimation, the other is more considered and detailed.

Approach 1: 10x your salary

A well-established quick approach to deciding how much life insurance you need is to simply take your annual salary and multiply it by 10. This is a more rough-and-ready approach, but there is logic behind it.

People tend to take out life insurance as they realise life would be more challenging for their loved ones without their financial input. Mortgages still need to be paid, children still need to be raised. Therefore, you can simply look to replace the income that your family would lose should you no longer be here.

But why only 10 years? If you have very young children and plenty of years left on your mortgage, wouldn’t you need more than 10 years salary? Yes, but remember that there isn’t any income tax or national insurance contributions on your life insurance payout, so that makes a substantial difference to how much you need to account for. Any tax required on life insurance will be calculated on various individual circumstances, but the point is that it’s not treated the same as your salary.

Your loved ones may also be able to pay off a larger chunk of the mortgage earlier, depending on break clauses or early repayment options, as your life insurance payout is one lump sum. Finally, your replacement income wouldn’t be needed to pay for things you buy for yourself, like food, travel and clothes, so it covers your family for a longer period.

Clearly, it’s not a sophisticated approach. It doesn’t take into account your age, the value or length of your mortgage and more. If you have a strong salary and a small mortgage, the 10x approach could be far more than you need. All that being said, it’s not a bad place to start.

Approach 2: Calculating all outgoings and income

The second approach takes a bit more planning, but it can give you a more accurate picture of how much cover you might want. 

Step 1: Add up your mortgage and debts

Start with your outstanding mortgage balance, if you have one. According to the Finder, the average outstanding mortgage in the UK was approximately £139,699 as of the last quarter of 2025, so it’s often front of mind when people are thinking about what they want to cover. Then add any other debts: personal loans, car finance, credit cards. In the UK debts aren’t passed down to family members in the event of death, but they don’t disappear either. Depending on the debt, they may need to be paid out of your estate. In terms of a mortgage, if your loved ones are not able to afford the monthly repayments without your income, the property would most likely need to be sold.

If you split these payments with a partner, you can halve this total figure.

Step 2: Include your day-to-day costs

Next look at what you pay towards general living costs for your loved ones. If you have children, that will probably be the main consideration as they will most likely depend on you financially until adulthood and potentially longer. 

According to The Child Poverty Action Group, the cost of raising a child from birth to 18 is £250,000, or £290,000 for a single-parent, as of 2025. You might also want to include:

• Bills 
• Holiday costs
• Christmas and birthday presents

Step 3: Think about future costs

There are costs that come up in life that don’t fall into day-to-day spending, but you might still want to contribute towards. You can add these into your equation as you see fit. 

• Funeral costs. The average UK funeral now amounts to £5,212, according to the 2025 British Seniors Funeral Report
• A contribution to a child’s wedding. According to the Hitched 2026 Wedding Report, the average spend on a UK wedding in 2026 is £21,990
• Any additional amount you’d want to leave behind. Remember that your family would be navigating life without you. Some people like to leave more than just covering expenses to make things a little easier or help set children up for their future

Step 4: Subtract what you already have

Check whether you have any existing cover that would reduce the gap. This might include a death-in-service benefit through your employer, savings or investments that your family could draw on. Bear in mind, a death-in-service benefit is not something that all employers offer (and obviously doesn’t apply if you’re self-employed), so if you change jobs, you may lose it. It’s up to you whether to include it in your calculation.

Your total cover need is broadly: Step 1 + Step 2 + Step 3 - Step 4.

An illustration of what this might look like

The following is an illustration of how this calculation might look in practice. All figures are examples only and should not be taken as financial advice or as a quote.

Sarah is 34 with two children aged 2 and 5. Her partner also works, earning a similar salary, so they make the same contributions to mortgage repayments and general costs. She wants cover in place until her youngest turns 18, which gives her a 16-year term to work from. She assumes her partner will continue to earn a similar amount and can therefore continue to contribute to costs.

When she takes into account her partner’s contribution and the family’s savings, her estimated cover need comes to approximately £341,500. She would like to give the family some financial breathing room, so adds on an extra £50,000 to help with future costs like weddings and housing deposits. This brings her final cover amount to £391,500.

This is an illustration only. Your own figures will depend on your specific mortgage, debts, income and family circumstances.

Do I need life insurance if I’m single?

People without a partner or children sometimes assume life insurance isn’t relevant to them, but it’s worth thinking through your specific situation before drawing that conclusion.

If you have a mortgage, a co-signed loan, or anyone who relies on your income, such as an ageing parent, then the case for having some cover is similar to anyone else in those circumstances. Without dependants or significant debts, you may need less cover, but life insurance can help reduce the impact of any outstanding debts on your estate.

Do I need life insurance if I have no mortgage?

Not having a mortgage doesn’t remove the need for life insurance if people depend on your income. Families who rent still need to cover ongoing rent payments, bills and living costs if a partner or parent were no longer around.

Without a mortgage in the equation, the amount of cover you might need could be lower, but the need to replace your income and childcare costs still apply in the same way they would for a homeowner. The lump sum of a life insurance payment can help you to do that.

If you have no mortgage, no dependants and no significant debts, you may feel that life insurance isn’t something you need right now, which would be a perfectly reasonable conclusion to reach. You can always revisit your situation if your circumstances change.

What affects the cost of life insurance?

Once you have a sense of how much cover you need, the cost of your policy will depend on a number of factors:

• Your age: Younger applicants typically pay lower premiums, as the statistical risk to the insurer tends to be lower
• Your health and medical history: Pre-existing conditions may affect the cost or availability of cover
• Whether you currently smoke: Active smokers typically pay more than non-smokers
• The length of the policy term
• The type of policy: Decreasing term tends to be the lowest-cost option, as the payout reduces over time; level term has a fixed payout and typically costs more; increasing term, where the payout rises with inflation, tends to be the most expensive of the three

In general, taking out cover when you’re younger and in good health tends to result in lower premiums. Premiums are fixed at the start of your policy and don’t change unless you choose increasing cover.

Which type of life insurance should I get?

Post Office offers three types of term life insurance. Here’s a brief summary of each:

• Decreasing term: The payout reduces over the life of the policy, broadly in line with a repayment mortgage balance. Monthly premiums are typically lower than for a level term policy
• Level term: The payout stays fixed throughout the policy term, whatever stage of the term a claim is made. Premiums are fixed too
• Increasing term: The payout rises each year, typically in line with RPI up to a set maximum, to help it keep pace with inflation. Both the payout and the monthly premiums increase over time

The type that may suit you most will depend on what you want the policy to do. The guide above should give you a clearer sense of the kind of cover your situation calls for.

Why Post Office Life Insurance?

• Cover from £10,000 up to £750,000, depending on your age
• 98.47% of life insurance claims paid in 2024
• Terminal illness benefit included as standard: if you’re diagnosed with a terminal illness and given less than 12 months to live, 100% of your lump sum is paid to you in advance
• Decreasing, level and increasing cover options, so you can match the policy type to your circumstances
• Optional critical illness cover and children’s cover available as paid add-ons
• Individual and joint policies available
• 24/7 access to a UK-registered GP1 for you and your family throughout your policy¹, plus health, wellbeing and bereavement support
• UK-based customer service team

¹Service separate from the policy contract. It may be withdrawn at any time.

Key takeaways

• The 10x salary rule is a valuable starting point but doesn’t consider the specifics of your situation
• You might prefer to add up your mortgage, debts, day-to-day spending and future costs, then subtract any existing protection and savings
• The age of your youngest child can help determine the policy term you need
• If you have no mortgage and no dependants, life insurance may be less of a priority, though it’s worth reviewing as your circumstances change
• Taking out cover when you’re younger tends to result in lower premiums, which are then fixed for the life of the policy