A simple way to work out how much life insurance you need is to add up three things: your mortgage, your other debts, and the income your family would need to keep going without you. For many families that comes to the mortgage balance plus several years of take-home pay. There’s no single right number, but the aim is that your family could stay in the home and keep up with everyday bills if the worst happened.
This guide walks through how to work out your figure, the main types of life cover, and the questions people in Northern Ireland most often ask us.
How do I work out how much cover I need?
Start with what your family would need to pay off, then add what they’d need to live on:
- Your mortgage. The amount still owed, and the number of years left on it.
- Other debts. Car finance, loans and credit cards.
- Lost income. What your take-home pay contributes to the household each year, multiplied by the number of years your family would need support, for example until your youngest child finishes school or university.
- Childcare and future costs. If your partner would need to work less or pay for more childcare, include that.
- Funeral costs. These often run to several thousand pounds.
Then take away anything already in place, such as death-in-service benefit from work (often a multiple of your salary) or savings your family could use. What’s left is roughly the gap your life insurance should fill.
A worked example
Take a couple with two young children and a £180,000 repayment mortgage with 25 years left. One partner takes home £28,000 a year. To clear the mortgage and replace that income until the youngest child turns 18, in about 15 years, they might look at around £180,000 of decreasing cover for the mortgage plus level or family income cover for the lost earnings. Their work death-in-service benefit of two times salary would reduce how much extra cover they need. The right mix depends on the family, which is why we go through it with you.
What types of life insurance are there?
- Level term life insurance pays out a fixed lump sum if you die during the policy. It’s often used for family protection or an interest-only mortgage.
- Decreasing term life insurance, often called mortgage protection, pays out an amount that falls roughly in line with a repayment mortgage. It’s usually the cheapest way to make sure the mortgage would be cleared. Read our guide to mortgage protection.
- Family income benefit pays a regular monthly or yearly income for the rest of the policy term instead of one lump sum. It’s a cost-effective way to replace lost earnings.
- Whole of life insurance covers you for the rest of your life, so it will pay out at some point. It costs more and is often used for inheritance tax planning.
Many people combine life cover with critical illness cover, which pays out if you’re diagnosed with a serious illness rather than only on death.
Single or joint policy?
A joint policy covers two people and pays out once, usually on the first death, then ends. Two single policies cost a little more but could both pay out, and each person’s cover carries on if the other claims. If you separate in the future, single policies are also simpler to sort out.
Do life insurance claims get paid?
The vast majority do. In 2025, insurers paid out £4.03 billion in individual life insurance claims and paid 96.7% of new claims, according to the Association of British Insurers. Most declined claims come down to information that wasn’t disclosed on the application, which is why we help you answer the health and lifestyle questions fully and accurately.
Questions people ask
Is life insurance a legal requirement for a mortgage?
No. Lenders don’t require it, but if you have a mortgage and anyone who relies on your income, it’s one of the most important things to put in place.
How much does life insurance cost?
It depends on your age, health, whether you smoke, how much cover you want and for how long. Cover is usually cheaper the younger and healthier you are when you take it out, and the premium is normally fixed for the whole term.
Should my life insurance be written in trust?
Often, yes. A trust lets the payout go to the people you choose, usually more quickly than through your estate, and it can help keep it outside your estate for inheritance tax. We’ll explain whether it suits you.
Can I get life insurance with a health condition?
Often, yes. Many people with conditions such as diabetes, high blood pressure or a past illness can still get cover, sometimes at a higher price. Insurers assess conditions differently, so it helps to have an adviser who knows which ones to approach.
What happens to my cover if I remortgage or move?
Your life insurance is separate from your mortgage, so it usually carries on. It’s worth checking whether the amount and term still match your new mortgage, and topping up if you’ve borrowed more.
What our clients say
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How McDowell can help
We’re a Northern Ireland based adviser with over 30 years’ experience of protecting families and their homes. We’ll work out how much cover you need, compare insurers, and help you set up a trust where it makes sense. Find out more on our life insurance page, or book a free call below.
Life insurance has no cash value unless a valid claim is made. Cover is subject to the insurer’s acceptance and terms.
This article is general information only and isn't personal advice. Mortgage and protection products depend on your circumstances, so please speak to one of our advisers before making a decision.
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