By Clare Yates
6 min read
Working out how much life insurance you need can feel like a big question, but it often comes down to one thing: what would you want your policy to do for the people you care about?
Everyone’s situation is different, so there’s no one-size-fits-all number. Instead, it’s about thinking through your own life, your responsibilities and what kind of financial support your family would need if you weren’t around.
What do you want your life insurance to cover?
A good first step is to think about the things you’d want your policy to take care of. This will often fall into a few key areas.
Supporting children or other dependants
If you have children or anyone else who relies on you financially, you might want your policy to help cover the costs of raising them. That could include:
Childcare.
Day‑to‑day living costs.
School or university expenses.
Specialist care for dependants with additional needs.
In this case, how much you need depends on how many dependants you have and how long they’ll need support. For context, the Child Poverty Action Group estimated that in 2025, the basic cost of raising a child to age 18 was £250,000 for a couple and £290,000 for a lone parent. That doesn’t mean you need that exact amount of cover – but it’s a useful reminder that raising a family isn’t cheap.
Helping your partner manage financially
If you’re the main earner, your income disappearing could have a big impact on your household. Even if you’re not the main earner, your contribution still matters – especially if you’re the one who handles childcare or unpaid work at home. Think about:
Your take‑home income.
Your household bills.
Rent or mortgage payments.
Additional childcare costs.
MoneyHelper’s 2025 figures show that nursery costs vary widely across the UK. For example, sending a child under two to nursery full‑time can cost around £239 a week in England, £240 in Scotland, and £290 in Wales. For those with school-age children, the average cost of an after-school club is around £66 a week, or £2,593 a year during the 39 weeks of term time. If your partner would need to arrange extra childcare to keep working, that’s worth factoring in.
Think about whether you want individual cover for yourself, or a family life insurance policy to provide cover for both partners. Additionally, some policies pay out if a child becomes seriously ill, or passes away due to accident or illness, depending on the terms and conditions. This can be invaluable should your family face a difficult time.
Clearing your mortgage
Many people want life insurance to pay off the mortgage so their family can stay in the home without worrying about repayments. To work out how much cover you’d need, check:
Your remaining mortgage balance.
The type of mortgage you have (repayment or interest‑only).
How long is left on the mortgage term.
If you’re mainly taking out life insurance to cover your mortgage, make sure you arrange life insurance that fits. A level term policy keeps the payout the same for the whole length of the term, so it’s often used with an interest-only mortgage. A decreasing term policy gradually reduces the payout over time, usually in line with a repayment mortgage.
How long should your life insurance last?
Once you know what you want to cover, the next step is deciding how long you want the policy to run. You might choose to arrange cover:
Until your youngest child becomes financially independent.
Until your partner reaches retirement age.
Until your mortgage ends.
For the whole of your life if you’re looking for lifelong peace of mind.
There’s no right or wrong answer: it’s about what would give your family enough time and support.
How much can you comfortably afford?
Life insurance is there to protect your family, but it still needs to fit your budget. Typically, the higher the payout, the higher the monthly premium – and factors like age, health and lifestyle also play a part.
A few things to keep in mind:
Premiums are usually cheaper the younger you take out the policy.
Smoking and certain medical conditions can increase costs.
Choosing a longer term usually raises the price.
It’s all about finding the balance between what you want to cover and what feels manageable month to month.
How do you work out a rough cover amount?
A simple way to estimate what you need is to add up the big things you’d want your policy to handle. For example:
Your mortgage balance.
Annual household bills.
Childcare or education costs.
Any debts you’d want cleared.
Funeral costs.
Ongoing living expenses for your partner or dependants.
Some people multiply their annual income by a number of years (for example, 5–10 years) to give their family time to adjust. Others look at how many years it will be until their youngest child is out of education. There’s no perfect formula – just choose the method that feels most realistic for your situation.
And remember, if you already have savings, investments or any existing life cover in place, it’s worth taking these into account before deciding how much life insurance you need. These can reduce the amount of cover required, so you’re not paying for more protection than necessary. Just keep in mind that workplace life insurance usually only lasts while you’re employed there, so it may not be something you can rely on long‑term.
What else should you think about?
A few extra things may influence how much cover you need. Considering all of the following can help determine the level of financial support your loved ones would need.
Whether you’re single or in a relationship.
Who your beneficiaries are.
Whether you support elderly parents or vulnerable adults.
Any debts or loans you’d want cleared.
Whether your estate might be subject to inheritance tax.
Your family’s current lifestyle and spending.
Ultimately, life insurance is about peace of mind. Taking a little time to work out the right amount of cover means your family would have financial breathing space at a really difficult time. If you’re unsure or your situation is complicated, speaking to a financial adviser can help you feel confident you’ve chosen the right level of protection.