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    Life insurance

    How much life insurance do I need?

    Written by Emma Leadbetter, Editor and Copywriter, PremierPMI
    Reviewed by Stuart Hendy, PMI Expert and Head of Publishing, PremierPMI

    Published 15 September 2026 · Last reviewed 15 September 2026 · Next review 15 December 2026 · 3 min read

    The short answer

    Add up what the money would need to do: clear the mortgage and other debts, replace your income for the years dependants rely on it, and cover specific costs such as childcare or a funeral. Then subtract savings, existing policies and employer death-in-service benefits. The gap is the sum assured worth quoting for.

    PremierPMI is an insurance broker, authorised and regulated by the FCA (FRN 1029667). We may receive commission if you take out a policy. How we are funded.

    In this guide2 sections

    What to know about working out how much life insurance you need

    1. Start with debts that would fall due, clearing the mortgage first and then loans and credit cards. Read more
    2. Add income replacement, multiplying actual outgoings by the years dependants need support. Read more
    3. Add specific costs such as funeral expenses, then subtract savings, benefits and any existing policies. Read more
    4. The remaining gap, not a round multiple of salary, is the sum assured worth quoting for. Read more

    Thinking about working out how much life insurance you need

    What works well

    • The needs method ties cover to real outgoings, not round numbers.
    • Subtracting existing benefits avoids paying for duplicated cover.
    • A written calculation is easy to review and update.

    What to watch

    • Employer death-in-service ends when the job does.
    • Inflation erodes a level sum assured over long terms.
    • Underestimating childcare years is the most common gap.

    The arithmetic, in the right order

    Start with debts that would fall due: the mortgage first, then loans and cards. Add income replacement — a common working method is your net annual income multiplied by the years until your youngest dependant is financially independent, though the honest number is your household’s actual outgoings multiplied by those years. Add specific one-off costs you want covered, such as funeral expenses — SunLife put the average cost of a simple attended funeral at £4,285 in its Cost of Dying Report published in January 2025, with the wider cost of dying at £9,797.[3] Then subtract what already exists: savings you are prepared to commit, employer death-in-service benefits (often a multiple of salary — check your contract, not your assumptions) and any existing policies. The remainder is the gap a policy should fill. Round numbers like “ten times salary” are shortcuts past this arithmetic, not substitutes for it. Remember too that a pay-out landing in your estate counts towards Inheritance Tax, charged at 40% on the part above the £325,000 threshold[1], and that a life policy can instead be placed in trust.[2]

    Write the calculation down with dates and sources, and revisit it after every major life event — a new child, a new mortgage or a paid-off one all move the number. Whatever the specifics of working out how much life insurance you need, the discipline that protects your family is always the same: get the insurer’s position in writing, keep the documents with the policy, and make sure the people who would claim know the policy exists and where the paperwork lives.

    Related guides

    Looking at cover with PremierPMI

    PremierPMI is a specialist private medical insurance broker and the publisher of The Health Guide. If you want to talk through what this means for your own cover, you can start there.

    Or, if you would rather start here, send an enquiry and PremierPMI will contact you.

    PremierPMI is an insurance broker, authorised and regulated by the FCA (FRN 1029667). We may receive commission if you take out a policy. How we are funded.

    Common questions

    Why should mortgage debt come first when working out a sum assured?
    Clearing the mortgage removes the single largest, most time-pressured debt your family would face, so it is the natural starting point before anything else is added. Loans and credit cards come next, because they are also immediate obligations rather than ongoing costs. Only once these fixed amounts are totalled does it make sense to add income replacement and specific costs such as childcare or a funeral. Starting with debts keeps the calculation grounded in figures you can check against statements, rather than a guessed round number.
    How do I work out the income replacement part of the calculation?
    A common method multiplies your net annual income by the number of years until your youngest dependant becomes financially independent, which gives a quick estimate. The more honest figure uses your household’s actual outgoings rather than income, multiplied by the same number of years, since outgoings reflect what the money would actually need to cover. Either way, the years-until-independence figure drives the result, so it is worth checking carefully rather than guessing, and revisiting it whenever a child’s circumstances change.
    What should I subtract before settling on a final sum assured?
    Subtract anything that would already meet part of the need: savings you would be prepared to commit, any existing life policies, and employer death-in-service benefits, which are often a multiple of salary set out in your employment contract rather than something to assume. Once these are taken away from the combined total of debts, income replacement and specific costs, the figure left over is the genuine gap a new policy should fill, rather than a shortcut like ten times salary. Write the sum down with its date.

    Sources and methodology

    1. [1] HM Revenue & Customs (gov.uk). “Inheritance Tax”. Published Accessed 15 September 2026. View source(opens in a new tab)Primary source
    2. [2] HM Revenue & Customs. “Inheritance Tax Manual IHTM20141: life policies held in trust”. Published Accessed 15 September 2026. View source(opens in a new tab)Primary source
    3. [3] SunLife. “Cost of Dying Report 2025”. Published 15 January 2025. View source(opens in a new tab)Primary source

    We cite primary sources wherever possible. Read about our sourcing methodology.

    Written by

    Emma Leadbetter

    Editor and Copywriter, PremierPMI

    • 15 years health, finance and consumer journalism
    • PhD candidate, University of Chichester

    Emma has written across health, finance and consumer-affairs journalism for more than 15 years, and has been part of the PremierPMI team since 2022. She is known for making complex topics easy to understand, and fact-checks every guide against current insurer wording before it goes live. She is completing a PhD at the University of Chichester researching how the NHS has changed since COVID-19.

    Read full profile

    Reviewed by

    Stuart Hendy

    PMI Expert and Head of Publishing, PremierPMI

    • 20 years in UK private medical insurance
    • Underwriting and corporate placement specialist

    Stuart brings over 20 years of experience advising on UK private medical insurance. He is a key member of the private medical insurance team and Head of the Publishing Team, gathering detailed client requirements, liaising with insurers on tailored quotes, and running training on insurer product changes and underwriting nuance.

    Read full profile

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