How Much Life Insurance Do I Need In 2026?

It’s a common question: how much life insurance do I need if I’m single or part of a family unit?

A general guideline suggests obtaining insurance coverage approximately equal to 10 times the primary breadwinner’s income.

This level of coverage aims to ensure that your family can continue to live comfortably in your absence.
However, it is important to weigh this against your monthly premium budget, as more extensive coverage costs more.

We’ll Compare The UK’s Leading Life Insurance Companies For You – No Obligation Quote

The tables below help illustrate different aspects and considerations for determining life insurance needs.

Factors Influencing Life Insurance Needs

Factor	Description	Consideration
Income Replacement	Amount needed to support dependents’ living standards	Multiply annual income by the number of years support is needed
Debts & Loans	Total outstanding debts (excluding mortgage)	The sum of all personal loans, credit cards, etc.
Education Costs	Future education expenses for children	Estimate costs for school fees, university, etc.
Funeral Expenses	Expected cost of funeral and related services	Average costs can range significantly
Inheritance Tax	Potential tax on the estate	Consider if the estate value exceeds the tax-free allowance

Types of Life Insurance Policies

Policy Type	Description	Suitable For
Term Life Insurance	Provides coverage for a specific term	Those looking for temporary coverage or with limited budgets
Whole Life Insurance	Covers the insured for their entire life	Those seeking lifelong coverage and cash value accumulation
Decreasing Term Insurance	Coverage amount decreases over time	Primarily for covering a mortgage or decreasing debts
Joint Life Insurance	It covers two people and typically pays out on the first death	Couples, especially if they share financial commitments

Life Insurance Coverage Recommendations

Scenario	Coverage Recommendation	Rationale
Single with No Dependents	5-10 times annual income	Cover debts and funeral costs and provide a financial cushion
Married or Partnered	10-15 times annual income	Support the surviving partner, cover debts and future expenses
With Children	15-20 times annual income	Provide for children’s upbringing, education, and security
Business Owners	Depends on business value and debts	Ensure business continuity and cover any business-related debts

Additional Life Insurance Considerations

Consideration	Description	Impact on Coverage
Critical Illness Cover	Provides a lump sum on diagnosis of a specified illness	Can increase the total coverage needed
Income Protection	Replaces a portion of income if unable to work due to illness or injury	May reduce the amount of life insurance needed
Policy Riders	Additional benefits that can be added to a policy	Can increase premiums but provide more comprehensive coverage

Average Life Insurance Costs by Age and Policy Type

Age Range	Term Life (£/month)	Whole Life (£/month)
20-30	£8-£20	£50-£100
31-40	£14-£30	£70-£150
41-50	£20-£40	£90-£200
51-60	£30-£70	£120-£300

Note: These costs are indicative and can vary based on health, lifestyle, and coverage amount.

Many People Still Remain Uninsured

Everyone with a family has the same worries. How will they be cared for if something happens to you or your wage-earning partner? The sad truth is that too many don’t know.

Research figures published on MoneyFacts.co.uk just last year revealed…

“46% of those with children aged 18 or under, and/or married and in a long-term relationship, don’t have any life insurance, a figure which rises to 72% when considering those without critical illness cover.”

In reality, thousands of people are uninsured, and some are underinsured.

Some may even lack the right type of insurance. The main myth is that insurance isn’t affordable.

It is affordable, provided you research providers, shop around, and, most importantly, be realistic about your needs.

Have you got yourself life insurance for your day-to-day working life locally? How about when you decide to work overseas?

According to thisismoney.co.uk, three-quarters of adults with families in the United Kingdom have life insurance. However, one in four people still lacks life insurance.

However, this does not matter only within the UK. UK expatriates working overseas are eligible and should have expatriate life insurance cover.

If you are yet to join the life insurance bandwagon, your first question must be, “Where should I start?”

How Much Life Insurance Do I Need In The UK?

As this is an individual decision, it likely depends on factors such as how much your dependents rely on your income, how much insurance costs, and how much you can afford to spend each month.

However, Britons often underestimate how much life insurance they’ll need.

If you’re not sure about coverage, take a look at these aspects before making your final decision:

Covering Your Mortgage

If you’re looking for life insurance in the UK, it’s important to consider how your family would afford the mortgage repayments if you died.

Many homeowners choose to take out a mortgage life insurance policy that pays a lump sum large enough to pay off their mortgage debt.

Mortgage life insurance policies typically run until the mortgage is paid off and can be either level term or decreasing term cover.

Most people with repayment mortgages opt for decreasing life policies, which means the payout decreases as their mortgage balance decreases over time.

If you currently have an interest-only mortgage and are only repaying the interest, not the capital, remember to include both capital and interest when working out how much cover you need.

Life Insurance Quotes: Quick, Simple & Free. We’ll Compare The Best Deals For You

How to Calculate Life Insurance Needs

To work out how much life insurance we need, we consider our debts, income, and the family’s future plans.

• Check our current financial state.
• Think about what we plan for our loved ones.

Years-Until-Retirement Method

We find out how much life insurance we need using the years-until-retirement method. We multiply the number of years until we retire by our yearly income.

This shows how much support our families would need if something happened to us before retirement.

This way, we look beyond immediate debts and costs. It also covers ongoing needs up to what would have been our retirement age.

Standard-of-Living Method

The Standard-of-Living Method helps us determine how much life insurance we need. It aims to keep our family’s daily life the same if something happens to us.

For a spouse or partner, this means getting enough insurance to equal four times the yearly salary. This amount helps cover everyday costs and keeps things steady for those who rely on us.

This approach also considers the cost of raising kids and their education until they’re 18 or finish university in England. It covers tuition fees and living expenses for a three-year course.

The goal is to ensure our children can still reach their educational dreams, even if finances tighten after losing a family member.

We want to protect our loved ones and ensure they can live well now and have opportunities later without financial worry during hard times.

Covering family expenses

Regarding life insurance, it’s essential to consider more than just your debts. If something were to happen to you, your loved ones would need to be able to cover necessary expenses, such as food and bills.

That’s why taking out a life insurance policy is a good idea, particularly if you are a Mum. A policy can provide your family with a financial cushion should you pass away, which can help them pay for things like childcare or education costs.

So, if you’re considering taking out life insurance, weigh all your options and compare policies. That way, you can be sure you’re getting the best deal possible.

Replacing Your Income

Consider how much money you’ll need to keep coming in each month. You want to ensure your policy covers your current and future expenses, but you don’t want to pay too high monthly premiums.

Try multiplying your salary by the number of years you need to keep earning. This will give you a reasonable estimate of the payout you’ll need.

Critical Illness

Critical illness insurance is designed to provide a tax-free lump sum if you’re diagnosed with a serious illness during the policy term.

The lump sum can be used in any way you want, such as to help pay mortgage repayments, replace lost income, pay for private treatment, or make adaptations to your home.

You might think that your health is good and that you have a young family dependent on your income, so you don’t need this type of coverage.

Unfortunately, no one knows what is around the corner, and critical illness can happen to anyone at any time.

According to the Association of British Insurers (ABI), one in three people in the UK will develop some form of cancer during their lifetime.

Moreover, the ABI says that around 150,000 people in the UK have a heart attack every year, and approximately four out of every ten men and six out of every ten women will die from coronary heart disease.

If you’re the primary breadwinner in your family, imagine how they would cope financially if you became seriously ill and couldn’t work. This is where critical illness coverage could help.

Of course, no one likes to think about what might happen if they become seriously ill, but taking out critical illness cover gives you peace of mind that you and your family would be financially protected should the worst happen.

Many types of critical illness policies are available, and coverage levels vary by provider. Shopping around and comparing policies is important to ensure you get the right cover for your needs.

Covering Funeral Costs

One of the primary purposes of life insurance is to provide financial protection for your loved ones in the event of your death.

This can include covering the costs of your funeral. Funeral costs can be high, and they can be a burden on your loved ones at an already difficult time.

Life insurance can help to ease this burden by providing the funds to pay for your funeral.

You can either factor the extra cost of a funeral into your life insurance policy or opt for a specialist funeral plan.

A funeral plan is a way to arrange and pay for your funeral before you die, so you know your wishes are taken care of, and your loved ones are not left with a large bill.

You can pay instalments or a lump sum to a funeral planner, which invests your money into an insurance policy or an independent trust fund.

Either way, life insurance can provide peace of mind by knowing that your funeral costs are covered.

What Are The Main Types Of Life Insurance?

There are two different types of life insurance you can get. Read on to discover which one is right for you and your situation.

Term Life Insurance

One of the different types of life insurance you can choose is term life insurance. This is considered one of the most basic forms of insurance. It offers death benefit protection but no cash value accumulation.

This may be the best coverage you can apply for if you are a young person in good health with a family to look after.

For How Long Does It Cover You?

This is coverage that can be purchased for a specific period. Typical term life insurance policies come in increments of five years. They start at 10 years and can go up to 30 or even longer.

Some suitable insurance carriers will also offer a one-year renewable term.

Pros and Cons

So, what are the advantages and disadvantages of taking such cover?

Term life insurance is one of the best-known types of life insurance policies and one of the most affordable.

You’d be hard-pressed to find a single financial planner who would recommend other types of life insurance, especially for young ex-pats.

Of course, this is very generalised, and you need to consider your situation and needs before choosing a life insurance plan that suits you.

If you have term life insurance, particularly a level term life insurance policy, the premium you must pay through the policy period stays the same. There’s no need to worry about increased costs or nasty surprises.

One of the biggest problems with this type of life insurance policy is that it renews at an increased premium.

This means that if you get this insurance for five years and then for another five years, the amount you have to pay increases.

In some cases,  it can rise by as much as 200 per cent. However, this isn’t always the case. Some increase only slightly, whereas others may keep the premium the same while reducing the face amount.

Examples of Term Life Insurance

Term life insurance comes in various types. We have listed them below.

• Decreasing Term life insurance: This keeps your policy premium the same throughout the policy term. However, the death benefit goes down over the period you have it.
• Level Term Life Insurance: If the idea of losing death benefits doesn’t appeal, you can always get level-term life insurance. This type of insurance policy offers fixed premiums and fixed death benefits for the length of your coverage.

Whole Of Life Insurance

3 Key Questions to Consider about Life Insurance

Do you really need it?

Do I need life insurance has to be the most popular question asked. The simplest way to answer this is to consider who relies on you getting paid.

Do you have children, dependent relatives, or a partner reliant on your income to pay the mortgage?

You need life insurance if your earnings support other people’s living costs. If you get your wages paid and are free to splash every last penny however you please without affecting anyone, you won’t need the cover.

Chances are, though, someone in your life would need financial support if you weren’t around, even if that’s a distant relative who shows up at your door only when he or she needs something.

And also, think about this… It’s not just for homeowners to ensure the mortgage is paid.

People who rent also need it to ensure they pay their rent. You don’t need to own your home to insure your family.

How much should the policy cover?

The policy’s value should at least cover the remaining balance on the mortgage. If there’s no mortgage, the minimum should clear the debts.

Things to consider are:

• Outstanding debts include the family car and any household items bought on credit.
• Dependent parents may need care costs, such as ongoing live-in support, rentals for a retirement home or a part-time carer.
• The ongoing care and living costs for children.
• Not to mention the rising cost of living.

The reality is that even with life insurance in place, money only goes so far.

You can’t protect against everything, but you can think about where the money would need to be spent to determine how much coverage you need.

What type of cover should I get?

If you’re after affordable life insurance, term cover is a good option. Whole-of-life cover is pricier because it lasts until you die.

With term life cover, the idea is to have the policy cover your major debts.

There is also decreasing term cover, which is more suitable when your most pressing concern with insurance is ensuring the mortgage is paid while getting the most affordable premium.

With a decreasing term policy, the monthly premiums and the payout decrease over the policy term.

Those are just for life insurance. It’s also wise to consider the family background of critical health conditions and other life-threatening conditions.

Suppose there’s a history of cancer, heart conditions, or brain disorders, which would increase your care costs while decreasing your income due to being unable to work. In that case, life insurance doesn’t help you as it is only payable upon the policyholder’s death.

Critical illness cover is available to protect against illness, and if you’re more concerned about lost earnings, income protection could be more suitable.

The Average Cost Of Life Insurance?

The UK’s average cost of life insurance depends on various factors, including age, sex, and health history. However, as a general guide, you can expect to pay around £10-15 per month for life insurance cover.

It’s important to shop around to find the best deal on life insurance, as premiums can vary significantly from one provider to another.

It’s crucial to inform your family after you get one, so they don’t have to struggle with a lost and unclaimed insurance policy when you pass away.

You can use a comparison website such as Insurance Hero to find the cheapest life insurance policies available in the UK. You might also want to read our detailed guide, which many have found helpful.

How Much Life Insurance Do You Need? Final Thoughts

Before you start work in the United Kingdom or travel overseas, choose the right type of life insurance that suits you.

Whether you go with term life insurance or whole of life insurance, you must ensure that you get insurance from a reliable team of experts.

For more information on how we can help you, click here!