Life Insurance · UK Guide 2026

Life insurance calculator: how much cover do I need?

There is no single ‘right’ number, but a few simple calculation methods can turn a guess into a considered figure. This guide compares four ways to size your cover in the UK in 2026 — the income-multiple shortcut, the DIME method, a full needs analysis and human life value — with two worked examples. Information only, using indicative figures.

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Quick answer

How to calculate how much life insurance you need

Add what your family would need to replace or repay — the mortgage, other debts, several years of your income, and future childcare or education costs.
Subtract what they already have — existing life cover, workplace death-in-service benefit and accessible savings. The gap is your indicative sum assured.
Sense-check with a shortcut — roughly 10 times your annual income is a quick starting point to compare against the detailed total.
Match the term to your commitments — typically until the mortgage ends or the youngest child is financially independent.

Four methods

Four ways to calculate your cover, compared

Different calculators lean on different methods. None is ‘correct’ on its own — using two together (a detailed method plus a shortcut sense-check) tends to give the most realistic figure.

Method	How it works	Best when
Income multiple	Multiply your annual income by a factor — commonly around 10 — for a quick starting figure.	You want a fast sense-check or ballpark number.
DIME	Add Debts, Income to replace, Mortgage and Education/childcare, then subtract existing cover and savings.	You want a structured estimate in a few minutes.
Needs analysis	Build a detailed budget of everything your household would need to pay for, year by year, less all resources available.	Your finances are more complex or you want precision.
Human life value	Estimate the total future income you would earn to working age, adjusted to today’s money.	Income replacement is the main goal.

Indicative methods only — not a recommendation or a quote. Your figures, term and premium depend on your circumstances and the insurer’s underwriting.

Worked examples

Two worked examples using DIME

The DIME method is the easiest to work through by hand. Below are two contrasting households. The figures are round, indicative numbers used only as an illustration — your own situation will differ.

DIME factor	Young family, large mortgage	Couple, 50s, mortgage nearly clear
D — Debts	£12,000	£5,000
I — Income replacement	£32,000 × 12 = £384,000	£40,000 × 5 = £200,000
M — Mortgage	£220,000	£30,000
E — Education / childcare	£60,000	£0
Subtotal	£676,000	£235,000
Less existing cover & savings	−£96,000	−£85,000
Indicative cover needed	£580,000	£150,000

Illustrative examples only — not a quote. The younger household needs far more because of a big mortgage, dependent children and more years of income to replace; the older couple needs less as debts fall and dependants become independent.

As a sense-check, the income-multiple shortcut points to about £320,000 for the first household (£32,000 × 10) — lower than the DIME figure, which is expected when there is a large mortgage and young children on top of income replacement. For a full step-by-step of the DIME approach, see how much life insurance do I need on the life insurance hub.

Don’t double up

Subtract the cover you already have

A calculator only gives a useful answer once you deduct what your family could already draw on. The most commonly missed item is death-in-service — a lump sum, often two to four times salary, paid by many employers. Add any existing life policies, critical illness or mortgage cover, plus accessible savings and investments. Subtracting these avoids paying for more cover than you need. Bear in mind that death-in-service usually ends if you leave the job, so it is worth treating as a top-up rather than a permanent foundation. Once you have a target figure, a broker can help you compare the UK market for a policy that matches it.

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The other half

The amount is only half the calculation

Sizing the sum assured is one decision; the term is the other. A common approach is to match the term to the longest period during which someone depends on you financially — usually the years left on your mortgage, or until your youngest child is likely to be financially independent. Many people combine level term cover for income replacement with decreasing term to track a repayment mortgage, so the cover falls roughly in line with the balance owed. It is also worth re-running your calculation after big life events — a new mortgage, a baby, a significant pay change, or marriage or divorce — because the ‘right’ amount moves over time. Browse the life insurance hub for related guides by age, health and cover type.

Common questions

Life insurance calculator: FAQs

How do I calculate how much life insurance I need?

Add up what your family would need to repay and replace — your mortgage, other debts, several years of your income, and future childcare or education costs — then subtract existing life cover, workplace death-in-service and accessible savings. The remaining gap is an indicative figure for the cover you might need. The DIME method is a simple way to structure this.

Which calculation method is most accurate?

A full needs analysis is the most detailed, but DIME gives a close estimate in a few minutes for most households. The income-multiple shortcut is the least precise and is best used as a quick sense-check against a fuller total rather than as the answer on its own. Using two methods together tends to give the most realistic figure.

Is 10 times my salary enough cover?

Around 10 times annual income is a popular starting point, but it is only a guide. A large mortgage or several young children can push the figure well above that, while substantial savings or generous death-in-service cover can bring it below. Compare the multiple with a DIME or needs-based total rather than relying on it alone.

Should I include my mortgage in the calculation?

Yes. Clearing the outstanding mortgage is usually the single largest element of the cover a family needs, which is why it is the M in DIME. Some people arrange decreasing term cover to track a repayment mortgage, so the cover reduces roughly in line with the balance owed over the term.

Do I need to subtract cover I already have?

It is sensible to. Existing life policies, death-in-service benefit through your employer and accessible savings all reduce the gap new cover needs to fill. Subtracting them avoids over-insuring. Remember that death-in-service usually stops if you change jobs, so it is safer to treat it as a top-up rather than a permanent foundation.

Can a calculator tell me my premium?

No. A needs calculator estimates how much cover to aim for, not what it will cost. Your premium depends on the sum assured, the term, your age, health, smoker status and the insurer’s underwriting. Once you have a target figure, comparing quotes across the market is the only way to see an accurate price.

How often should I recalculate my cover?

Re-run the numbers after any major life event — moving home or remortgaging, having a child, a significant change in income, or marriage or divorce — and every few years in between. A new mortgage can sharply increase the figure, while children growing up and debts being repaid tend to reduce it.

Information only — not financial advice. The figures on this page are indicative and illustrative only and are not a quote or a recommendation. My Insurance Expert is not an FCA-authorised intermediary and does not arrange or sell policies. Last updated: 2026-08-19

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