Life Insurance & Income Protection Estimator (UK, 2026)

Applies the UK adviser rule of thumb (10× salary + mortgage + debts − death-in-service) to size life cover, mortgage + 2 years of outgoings for critical illness, and 60% household net income for income protection. Overlays ABI-style age-banded premium rates with smoker loading, and tests affordability as a percentage of household net monthly income.

⏱️ 5-7 minutes • 💪 Standard

Updated April 2026

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\u2019t 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

  1. 1
    Enter gross income, age and smoker status.
  2. 2
    Enter partner income and household outgoings.
  3. 3
    Enter mortgage and other debts.
  4. 4
    Enter number of children and youngest age.
  5. 5
    Enter existing employer death-in-service and income protection.
  6. 6
    We size life, critical illness and income protection.
  7. 7
    We estimate monthly premium by age band + smoker loading.
  8. 8
    We test affordability as percentage of household net income.

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%.

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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.

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