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How Much Life Insurance Do I Need?

Some commentators offer an easy answer to this question: at least 10 times your annual salary.

But you can go more scientific with it. Start by adding up the outstanding balance on your mortgage (if you have one) and your debt.From there, you can add up your household running costs. Think childcare, food, energy bills and petrol, for example.

And even from there, you can start speculating as to what financial help your loved ones – your dependents, say – might benefit from in future. University fees, or a deposit on a home, or just a general sum of money to act as a financial cushion.

Let’s use some easy numbers:

  • Mortgage + debt = £150,000
  • Household running costs = £10,000 per year
  • Uni fees + home deposit = £50,000

To settle your debt, give your dependents a boost and cover your household running costs for five years, you’re looking at life insurance of £250,000.

Most life insurers have calculators on their website so those are a good place to start figuring out how much you need. You can, of course, insure your life for as much as you like but the higher you go the more expensive your monthly premiums will be.

For extra guidance on how much life insurance you need, why not have a conversation with an independent protection adviser or financial planner.

Life insurance costs vary from person to person, as is the case with most insurance policies. Here are a few factors that can impact your insurance premiums:


One of the leading impacts on your life insurance premiums is your age. Life insurance is significantly less expensive for younger individuals, particularly those who are in generally good health. As you get older, premiums on a new policy will increase.


Healthier individuals will often receive better rates than those considered unhealthy or at higher risk for health problems. To determine this, your insurer may look for proof of pre-existing conditions or serious illnesses, like cancer or heart disease. They may also evaluate specific health metrics, like your weight, blood pressure, and cholesterol levels.


Historically, men have paid higher rates than their female counterparts. In part, this is because men have a shorter life expectancy than women. This leads many life insurance companies to charge men higher premiums.

Smoking & Tobacco Use

Smoking is a major variable in life insurance costs. In fact, smokers can expect to pay as much as 50% or even more than non-smokers for the same policy, such are its dangers. Most insurers also see vaping as smoking, too. Only one or two U.K. insurers make a distinction between vaping and smoking but it’s not a big distinction - vapers will still be penalised.

Policy Type

As above, there are several types of life insurance policy available and the best for you depends on where you’re at in life. Your choice of policy type can drastically affect the life insurance premiums you’ll pay. Rule of thumb, the longer your policy term the more expensive it’ll be.

Occupation and Hobbies

Some occupations and hobbies carry a higher risk of death. Drivers or scaffolders have more dangerous jobs, typically speaking, than desk workers. Just as skydiving is a more dangerous hobby than stamp collecting. The increased risks of more dangerous jobs or hobbies will probably reflect in higher premiums.

Is Life Insurance Worth It?

As a starting point to determine if life insurance is worth it, ask yourself how your family would cope financially if you were to die.

Think about what you contribute to the household and the debts you have. Those costs won’t disappear. Also, think about the finances your loved ones might need in the future and whether your death would kibosh those opportunities.

Life insurance allows you to ensure your debts are paid, at least partially, and for you to contribute to household running costs after you die. If you’re a parent, you can provide funds to cover things like university fees or home deposits in the future.

If any of the above scenarios appeal, based on your situation, then life insurance may indeed be worth it.


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