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How much life insurance do I need?

Jenni Hill
Last Updated 6 February 2024

If your loved ones depend on you financially, life insurance could provide them with a cash payout if you were to pass away. But how much life insurance do you need and how much does it cost? 

In this guide

How much is life insurance on average in the UK?

The average cost of life insurance in the UK is currently £38.15 per month. However, the amount you’ll pay for life insurance will depend on several factors, such as your age, health, lifestyle, and occupation as well as the amount of coverage you choose and optional add-ons like critical illness cover or child cover.

How much life insurance do I need?

To work out how much insurance you need, you can start by adding up your debts. If you have a mortgage, what’s the outstanding balance? Make a note of any loans and credit card debts too. Next, work out how much you spend on other essential living costs such as rent, bills, food, transport and childcare costs. Don’t forget to include the cost of a funeral, solicitor fees and other death-related expenses. By adding all these costs together you’ll get an idea of how much money your loved ones might need if you were to pass away.


Did you know?

It’s not possible to inherit debt in the UK, meaning friends and family members cannot become responsible for your debts when you pass away. A loved one will only be responsible for the debt if you got a joint loan or agreement with them, or if they agreed to be your guarantor.

How much life insurance do I need if I’m single?

If you’re single and you don’t have any dependents, you might not need any life insurance at all. However, a small amount of life insurance can still come in useful, particularly if you pass away with little to no money in savings. A life insurance payout could cover the cost of your funeral and legal expenses, meaning your loved ones can give you the send-off you deserve without having to foot the bill themselves.

Should I add any add-ons to my life insurance?

Some life insurance policies offer optional add-ons, such as critical illness insurance, terminal illness cover or child cover. This can work out more cost-effective than taking out individual policies separately. 

Here’s a quick rundown of how the most common life insurance add-ons work:

  • Income protection will provide you with an income if you’re unable to work following an illness or injury. You’ll receive regular payments from your insurer, making it easier to keep on top of your mortgage payments, rent, bills and other expenses. 
  • Mortgage protection will cover your mortgage payments if you’re no longer able to afford them due to illness, a serious illness or redundancy.
  • Critical illness cover gives you a one-time lump sum if you’re diagnosed with a critical illness during your policy term, even if you’re still able to work and expected to make a full recovery. Cancer, heart attacks and stroke are often covered, though the exact illnesses covered can vary depending on the insurance provider. 
  • Terminal illness cover gives you a tax-free lump sum if you’re diagnosed with a terminal illness. You can use the payout to cover your living costs, pay for medical bills, or make adaptations to your home. 
  • Child cover can provide you with a payout if your child is diagnosed with a serious illness, is badly injured or passes away. 

While many insurance providers will let you add these types of cover onto your life insurance policy, others automatically include them in their policies at no extra cost.

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Learn more: The best critical illness policies in the UK 

Do you need life insurance if you have no mortgage?

Life insurance isn’t compulsory regardless of your situation, but you might still benefit from life insurance even if you don’t have a mortgage. If your loved ones depend on you financially, life insurance could provide them with a payout if you were to pass away during your policy term. They could use this money to pay rent, utility bills, and other living costs. They could also use it for non-essential expenses such as holidays or new furniture. 

It’s often possible to get life insurance quite cheaply, especially if you shop around and speak to a life insurance expert. Here at Tembo, we have access to life insurance policies for as little as £10 a month. The exact amount you’ll pay will depend on your age, health, job and level of cover, but we’ll compare hundreds of policies until we find the right one for you. 

If you live with your partner or spouse and you have children, we’ll help you decide between single life insurance and joint life insurance. Joint life insurance can be cheaper overall, but it’ll only pay out on the death of their first policyholder. If the surviving partner wants the cover to continue, they’d need to take out a new policy.

What age should you get life insurance?

There’s no specific age at which you should get life insurance, but the younger you are when you take out your policy, the more affordable your premiums are likely to be. Insurers will take your age and any existing health conditions into account when deciding how much to charge. You’ll usually need to be aged between 18 and 75 or 85 to get life insurance, but each insurer will have their own minimum and maximum ages.

These age limits will often depend on the type of insurance policy you need. Some insurance providers will offer term life insurance to those aged up to 85, for example. Term life insurance with critical illness cover, on the other hand, often has a maximum age of 75. 

Unsure which policy to choose?

With so many different types of cover to choose from, it’s a good idea to speak to an independent insurance specialist before choosing a policy. Here at Tembo, we can help you find the most competitive life insurance policies for you.

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