One of the most common questions we hear at Cover Direct is: “How much life insurance do I need?” It’s a fair question—and an important one. Get it wrong, and you could leave your family underinsured or end up paying for cover you don’t need.

The good news is that calculating the right amount isn’t as complicated as you might think. Here’s how to work it out.

Start with your debts

The first thing to consider is any outstanding debts that would need to be repaid if you passed away. For most people, the mortgage is the big one. Add up your remaining mortgage balance, plus any other loans, credit cards, or financial commitments.

This gives you a baseline figure—the minimum amount needed to clear your debts and prevent your family from inheriting them.

Factor in your family’s living expenses

Clearing debts is only part of the picture. You’ll also want to think about how your family would cope with day-to-day expenses without your income. Consider household bills, childcare costs, school fees, and general living expenses.

A useful rule of thumb is to multiply your annual income by 10. This provides a cushion that could support your family for several years while they adjust to new circumstances.

Don’t forget one-off costs

There are also one-off expenses to think about. Funeral costs in the UK can easily reach £4,000 to £6,000 or more. You might also want to leave money for your children’s education or to help them get on the property ladder one day.

Adding these to your calculation ensures your policy provides comprehensive protection, not just the bare minimum.

Consider what you already have

Before finalising your cover amount, take stock of any existing provisions. Do you have a death-in-service benefit through your employer? Savings or investments that could support your family? An existing life insurance policy?

Subtracting these from your total need gives you a more accurate picture of how much additional cover to buy.

A simple formula to follow

Here’s a straightforward way to calculate your cover:

Outstanding debts + (Annual income × 10) + One-off costs − Existing provisions = Cover needed

At Cover Direct, our advisers perform a full financial review to ensure you get exactly the right level of protection. No guesswork, no cookie-cutter policies. Get in touch today to find out what cover you need.

FAQs

Q1: Can I change my cover amount after taking out a policy?

A: It depends on your policy. Some insurers allow you to increase cover at certain life events (like having a child or moving home) without additional medical checks. However, it’s often easier and cheaper to get the right amount from the start. Our advisers can help you build in flexibility where possible.

Q2: Should I include my partner’s income in the calculation?

A: If your partner works and contributes to household expenses, their income provides some financial cushion. However, consider whether they could manage all expenses alone, especially if they’d need to reduce working hours for childcare. Many couples choose to insure both incomes for complete protection.

Q3: What if I can’t afford the cover amount I need?

A: Some cover is always better than none. If budget is tight, prioritise covering your mortgage and essential expenses first. You can also consider decreasing term insurance, which is more affordable than level cover. Our advisers can help you find options that fit your budget while still providing meaningful protection.