How This Tool Works
📋 Purpose
The UK is dramatically under-insured on income protection (ABI: £7 of life cover for every £1 of IP) and often over-insured on life cover because employer death-in-service isn’t counted. This tool applies standard adviser rules of thumb (10× salary + debts; mortgage + 2yr outgoings; 60% household net for IP) and overlays ABI benchmark premium rates by age band, so you get both the right cover figures AND a realistic monthly cost.
⚙️ How It Works
- 1Enter gross income, age and smoker status.
- 2Enter partner income and household outgoings.
- 3Enter mortgage and other debts.
- 4Enter number of children and youngest age.
- 5Enter existing employer death-in-service and income protection.
- 6We size life, critical illness and income protection.
- 7We estimate monthly premium by age band + smoker loading.
- 8We test affordability as percentage of household net income.
Recommended Cost Saver Partner
Sponsored Partner AlertTake control of your net pay and investments. Build your financial freedom strategy with Moola Pro.
We may earn a commission on purchases at no extra cost to you. While we only partner with trusted platforms through reputable affiliate networks, all services and accounts are managed directly by the provider, who will handle any customer care or account needs.
Life insurance + income protection — UK, 2026
How much life cover, critical illness and income protection do you actually need?
Rule-of-thumb cover sizing (10× salary + mortgage + debts) combined with ABI benchmark premium rates by age band, existing death-in-service and employer income protection netted off, and affordability assessed as percentage of household net income.
Your household
Typically 40% premium loading.
Debts and dependants
Dependency runs until age 21.
Existing employer cover
Typical employer benefit is 2-4× salary.
Check your benefits handbook. Many have none or 50%.
Recommended Cost Saver Partner
Sponsored Partner AlertDon't leave your salary to chance. Optimize your investments and reach financial freedom with Moola Pro.
We may earn a commission on purchases at no extra cost to you. While we only partner with trusted platforms through reputable affiliate networks, all services and accounts are managed directly by the provider, who will handle any customer care or account needs.
Was this tool helpful?
Your quick feedback helps improve our tools
Complete Guide: Life, Critical Illness & Income Protection (UK, 2026)
How to size cover, price premiums, and avoid the classic UK under-protection trap.
📅 Last updated: April 2026
Quick Tips
Jump-start your understanding with these essential tips
Trust forms are free from your insurer. They keep the payout out of your estate and out of IHT. No reason not to — 40% of a £200k payout = £80k to HMRC.
ABI: UK households have £7 of life cover for every £1 of income protection. But you're 5× more likely to be unable to work than to die during your working years.
A level-term £250k life policy might cost £25/mo. A decreasing-term £250k policy (tracks your balance down) costs £12-15/mo. Perfect if the purpose is mortgage protection only.
Instead of £500k lump sum, pay £2,500/mo for 15 years. Same financial protection for families; 30-50% cheaper because insurers prefer predictable outflows.
New child, new mortgage, new job — all change your cover needs. Re-quote every 5 years; premiums have dropped 20-30% over the last decade due to competition.
Step-by-Step Guide
Follow these steps to get the most from this tool
Age band (5-year brackets) drives the premium rate card. Gross income drives the life cover multiple.
Used for household net income calculation and 60% income protection target.
Added to the life cover figure. Also used for critical illness sizing.
Youngest age determines dependency years (until 21). More dependants = higher need for sustained income vs lump sum.
Death-in-service (typically 2-4× salary) reduces the life cover gap. Employer income protection (typically 0, 50% or 75% of salary) reduces the IP gap.
Headline premium is monthly combined cost. If affordability %>5%, trim cover (decreasing term, longer deferred, FIB instead of lump sum).
Advanced Topics
Deep dives for advanced users
Whole-of-life policies (WoL) guarantee a payout whenever you die — great for IHT planning. But standard WoL has reviewable premiums that can triple after age 65. For most families, term cover + a will + a pension is vastly cheaper than WoL.
A £250k policy taken at age 30 for 30 years is worth only £125k in real terms at year 20 (2-3% inflation). Opt for indexation (premium and cover both rise with CPI) at setup — ~5-10% more expensive but keeps cover real-terms constant. Fixed cover is rarely the right choice for 20+ year policies.
Joint life second-death (pays on second death) is IHT planning. Joint life first-death (pays on first death) is family protection. Two single-life policies cost 10-20% more but pay out TWICE if both die — which happens more than you'd think (accidents, pandemic). Most advisers now recommend two singles for families.
Class 1 = professional white-collar (accountant, solicitor) = cheapest. Class 4 = heavy manual (roofer, scaffolder) = 3-4× the premium. Class 2-3 = everything in between. Your occupation class is assessed at application and fixed for the policy term — even if you change jobs.
See Wills & LPA Planner — life cover is useless without a will directing where the money goes. Annuity vs Drawdown handles the retirement flipside.
You Might Also Like
Other tools that pair well with this one
📚Read More Articles
Discover helpful guides and insights