When it comes to life insurance, many of us look for a simple way to work out how much cover we need. A common approach is the "10x salary" rule, where you multiply your annual income by ten. While this is a helpful starting point, our latest research suggests that life in 2026 is often more complex than a single multiplier can capture and that families could be under insured by up to £168,000.
How do we currently calculate life cover?
Our survey found that 42% of people in the UK do not currently have life insurance. For those who do, the way they chose their cover varies:
17% guessed an amount that felt right.
16% matched it to their mortgage balance.
13% used a simple multiplier like the “10x salary” rule.
While these methods are common, they can sometimes lead to a "protection gap." Almost 1 in 4 people (24%) said they had between £50,000 and £99,999 of cover. Our survey showed that the average amount of life insurance cover is £189,200. However, when we look at the actual costs of modern living, this sum may not always stretch as far as families expect.
What is the DIME method?
The DIME method is a framework that can be used to estimate your life insurance needs. The approach helps you break down your financial life into four clear areas: debt, income, mortgage, and education.
Debt
It is helpful to consider all personal debts, such as credit cards, personal loans, or car finance. Currently, only 17% of people factor these into their life insurance. As of June 2026, the average UK household carries more than £8,700 in unsecured debt. Including these debts when estimating life insurance cover means any outstanding balances could be cleared through a policy pay-out.
Income replacement
This addresses how many years of your salary your family would need to maintain their lifestyle. According to the ONS, the median annual earnings for full-time employees in the UK is
You might choose to provide enough cover to replace this income for five, ten, or fifteen years, depending on your families needs.
Our data suggests that premiums for this level of cover vary depending on personal circumstances. For a non-smoker on a 10-year policy, the average monthly premium for £39,000 of cover falls is around the £22. Even opting for a higher buffer of £50,000 to £99,999, providing over two years of median salary, costs an average of £30per month.
Mortgage
Our survey found that only 21% of people factor their mortgage into their life insurance.
The average mortgage debt per household is £58,300. When considering mortgage commitments as part of life insurance cover, both the remaining balance and the length of the policy can influence the overall cost. Internal data shows that premiums can vary depending on factors such as age and policy term. For example, a 15-year policy covering a remaining mortgage averages £37 per month, while a 40-year policy taken out earlier in life averages £17 per month.
Education and childcare
Only 11% of people include education and childcare costs in their calculations.
In 2025, the cost of raising a child to age 18 was estimated at £250,000 for a couple. If you also wish to support a child through university, the average cost for a three-year course in 2026 is approximately £70,500.
How to move from guesswork to a reliable safety net
Rather than picking a round number, the DIME method helps identify specific outcomes, such as clearing the mortgage or securing a child's education fund.
Financial pillar | Average UK cost (2025/26) | Why it matters |
Average household mortgage debt | £59,000 | Ensures the family home is secure. |
Average unsecured consumer debt | £8,700 | Can prevent your savings or assets from being sold off to settle debts, keeping your estate intact for your loved ones. |
Average annual income | £39,000 | Provides a monthly budget for the family. |
Cost of raising a child | £250,000 | Covers essentials from birth to age 18. |
Our research shows that 45% of people feel confident their current insurance would meet their household's needs. When we combine the average costs of clearing debt, paying off a home, covering the cost of raising a child to 18, and replacing just one year of average income, the total cost comes to £356,700. Comparing this to the average cover amount of £189,200, many could be experiencing a shortfall by almost £168,000.
Life insurance doesn’t need to be based on a "best guess." By using the DIME steps, you can find a level of protection that feels right for your specific circumstances and provides your family with a clear financial path forward.
Methodology
Consumer survey A nationally representative survey of 2,000 UK adults was conducted between 25th and 27th of February 2026.
Compare the Market internal data, 10 year policy cover amount (non-smokers) and policy term length (mortgage cover), Aug 2025 - Jan 2026
The Money Charity, The Money Statistics, June 2026
ONS, Employee earnings in the UK: 2025
Child Poverty Action Group, The Cost of a Child Reports
Save the Student, How much does university cost? June 2026
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What our expert says...
“The 10x salary rule doesn’t cover the full range of modern UK living costs. In some cases, this can lead to what’s known as a ‘protection gap’, where the level of cover in place may fall short of the amount needed to support a household’s financial commitments.
The DIME method is a structured framework that turns vague estimates into a calculated, reliable safety net. It allows us to view life insurance as a tool for specific outcomes, such as clearing mortgage debt and securing a child's future education, rather than just a generic lump sum."