Life Insurance Calculator UK
How much life cover do you actually need? Compare the three approaches UK households and advisers use, DIME, the income multiplier, and Capital Needs Analysis, side by side.
Last updated: August 2026
Your situation
Drives the education component.
≈£30k state university, £50k+ independent school, £150k Oxbridge + grad.
Debts & cover
Cards, loans, car finance.
Employer death-in-service + personal policies.
Method assumptions
Default 10. Often set to years until the youngest child is independent.
Default 10×. Suggested for you: 11×.
Annual income the family needs if you die.
Income assumed to rise with inflation.
Net-of-inflation return on the lump sum.
Recommended cover range
The three methods give a sensible band rather than one "right" number.
DIME breakdown
Which method should you use?
DIME (Debt + Income + Mortgage + Education) is the most popular consumer rule of thumb, it adds up concrete liabilities and a block of income. Good for a quick, defensible figure. Go deep on DIME →
Income multiplier (commonly 10×, ranging 7–15×) is the fastest sanity check. It ignores your specific debts but is a useful cross-reference. Go deep on the multiplier →
Capital Needs Analysis is what UK IFAs use: it works out the lump sum needed to fund a target family income for a set period (allowing for inflation and investment return), plus one-off costs. The most tailored, the most inputs. Go deep on CNA →
Personal life insurance payouts are not subject to Income Tax or Capital Gains Tax. However, if the policy is not written in trust, the payout forms part of your estate for Inheritance Tax.
Each person has a nil-rate band of £325,000, plus a residence nil-rate band of up to £175,000when a main home passes to direct descendants. Both are frozen until April 2031, and the residence band tapers away above a £2m estate. Anything above the available bands is taxed at 40%.
A £500,000 policy paid into a taxable estate can therefore lose £200,000 to IHT. Writing the policy in trust normally keeps the payout outside the estate and gets it to beneficiaries without waiting for probate. Most insurers set this up free at application.
This is not regulated financial advice
FinanceToolz is an educational site. Nothing here is a personal recommendation, and we are not authorised or regulated by the Financial Conduct Authority to advise on, arrange or recommend protection products. Life cover, trusts and estate planning depend heavily on individual circumstances. Speak to an FCA-authorised protection adviser or a STEP-qualified solicitor before acting. You can check any firm or adviser on the FCA Financial Services Register.
Related calculators
Other free UK tools that follow on from this calculation.
Inheritance Tax Calculator
IHT at 40% (or 36% with 10% to charity) using both nil-rate bands and spouse transfers.
Pension Calculator
Project workplace auto-enrolment and SIPP contributions to estimate retirement income.
Annuity Calculator
Convert a pension pot into a guaranteed retirement income, single or joint life.
Mortgage Calculator
Monthly repayments, total interest and LTV for any UK mortgage scenario.
Reviewed by
Alexandre Bernier, LLM (UK), CFP®, CIM®, PFP®. Financial planner with 18 years in banking and wealth management, holding a UK master of laws and the Canadian CFP®, CIM® and PFP® designations. Writes and reviews every calculator and article on FinanceToolz.
Last updated: August 2026. How figures are sourced, reviewed and corrected is set out in our editorial policy. This is general information, not regulated financial advice.
Sources
Every rate and threshold used by this calculator is taken from the official pages below. If a figure here disagrees with one of these, the official page is right, please tell us.