Insurance sizing is fundamentally a replacement problem. If an income stopped tomorrow — through death, illness or injury — what would still have to be paid? The mortgage and other debts do not disappear. Dependants still need years of living costs until they are independent. Education, childcare and eventually a funeral all cost money regardless of what happened to the household's main earner. Once those figures are added up, whatever savings and existing cover the household already has can be subtracted, and what is left is roughly the gap a policy needs to fill. That is the arithmetic behind every calculator in this section.
Needs-based sizing versus rules of thumb
The oldest shortcut in life insurance is "ten times your salary", and it survives because it is close to right for a lot of households — but it is a coincidence of averages, not a calculation done for your situation. A needs-based method, sometimes called the DIME approach after its components — Debt, Income, Mortgage, Education — starts from your actual mortgage balance, your actual dependants' ages, and the actual years of income replacement you think are needed, and builds the figure up from there rather than down from a multiple. It will land near ten times income for a lot of families with young children and a mortgage, and noticeably above or below it for anyone whose circumstances do not match that average.
Life cover, income protection and critical illness are not the same product
Three distinct kinds of protection get lumped together under "insurance" and they solve different problems. Life insurance pays a lump sum, or sometimes a regular income, if you die within the policy term — it protects the people who depend on your income after you are no longer there to earn it. Income protection pays a regular monthly benefit if illness or injury stops you working, for as long as you remain unable to work up to a set age — it protects the household while you are still alive but not earning. Critical illness cover pays a one-off lump sum on diagnosis of a specified serious illness, regardless of whether it actually stops you working. A household can reasonably need all three, and sizing each one separately, rather than assuming one type of cover does the job of the others, is what the calculators in this section are built for.
Why cover needs change over time
The right amount of life cover for a 30-year-old with a new mortgage and a baby is not the right amount for the same person at 50 with fifteen years left on the mortgage and grown children. As debts get repaid and dependants become independent, the sum needed to replace lost income shrinks — which is why many mortgage protection policies are sold on a decreasing term basis, with the cover falling roughly in line with the outstanding loan, rather than staying level for the whole term and becoming more generous than necessary towards the end.
What a calculator can and cannot price
The calculators here give an order of magnitude — a defensible sum assured to take into a conversation with an adviser or insurer — not a quote. Actual premiums are driven by underwriting: medical history, family history, occupation, smoking status and age move the price of real cover far more than any formula on this page ever could. Two people with an identical needs calculation can be quoted very different premiums for identical cover. Treat the figures here as the starting point for that conversation, not a substitute for having it, and remember that nothing on this page constitutes financial or medical advice.
Underwriting: why identical cover can cost different amounts
Underwriting is the process an insurer uses to decide what a specific applicant's cover should cost, and it is where a needs-based sum assured meets the real pricing of a policy. A questionnaire, sometimes followed by a medical examination or a request for GP records, feeds into a risk assessment that is specific to the applicant rather than to the amount of cover requested. Two 35-year-olds asking for identical £300,000 of level term cover can be quoted noticeably different premiums once one of them turns out to have a family history of a relevant condition, or a job classed as higher risk, or simply smokes — none of which a sum-assured calculator has any way to know or account for.
Term, whole of life and decreasing cover
Most personal life insurance in the UK is level term cover: a fixed sum assured, a fixed premium, for a set number of years, paying out only if death occurs within that term. Decreasing term cover is built specifically to track a repayment mortgage, with the sum assured falling roughly in line with the outstanding loan, which usually makes it noticeably cheaper for the same starting cover. Whole of life cover has no end date and is guaranteed to pay out eventually, which is why it costs substantially more for the same sum assured — it is priced on a certainty rather than a probability. Choosing between them is mostly a question of what the cover is actually protecting: a mortgage that will eventually be repaid suits decreasing term; a fixed financial obligation with no end date, such as an inheritance tax liability, suits whole of life.
Why insurance needs are usually reassessed rather than set once
A sum assured calculated today reflects today's mortgage balance, today's dependants and today's savings — all three of which change. A new baby, a house move, a promotion or a mortgage overpayment each shift the underlying numbers meaningfully, and cover bought years ago at a smaller sum assured, or structured around a household that has since changed shape, is worth revisiting rather than assumed to still be correct. Because every calculator here recomputes instantly from whatever figures are entered, rerunning the numbers after a significant life change takes moments and is the easiest way to catch a gap in cover before it matters.