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How much life insurance do you need?

Life insurance can offer some comfort that your loved ones will be taken care of, financially, if you pass away.

The amount of cover needed will depend on your circumstances and this kind of cover isn’t necessary for everyone. We can help you: 

  • decide if you need life insurance

  • calculate how much life insurance you may need

Do you need life insurance?

If you have people who depend on you financially – a partner, children or perhaps an ageing relative – it may be worth considering life insurance. 

You may also need to consider your financial responsibilities – now and in the future – when you’re no longer around. For example, you may have a mortgage, household bills to pay and children to provide for. It’s not a nice thought, but even a basic funeral can be costly.

You may not need life insurance if:

  • you’re single and have no dependents

  • your partner earns enough money for the family to live on

  • you’re on a low income as your family may be eligible for state benefits – although you should check to see what they may be entitled to

You may already have some life insurance through your employer. If so, it’s important to check what’s included to see if you may need extra cover and to consider what would happen if you changed jobs.

Calculate how much life insurance cover you need

The amount of life cover you may need will usually depend on: 

  • what expenses you would want your pay-out to cover

  • how much you can afford to pay

For example, you may need life insurance to:

  • pay off your mortgage – the amount of cover needed will depend on how much is remaining on your mortgage and the type of mortgage you have

  • pay off other debts you owe – this can include any loans, cards or overdrafts that may need to be paid off

  • help look after your children – the basic cost of raising a child until their 18th birthday for a lone-parent is £5,701 a year, rising to £10,390 a year, if you include childcare.1 The amount of money needed will depend on how many children you have and how many years they’ll need support for.

  • cover your funeral costs – the average cost of a funeral in the UK is £3,7852 but prices can vary depending on the type of funeral you’d like and where you live.

It’s important to strike a balance between having enough cover to support your loved ones and being able to afford to pay for the policy.

What types of life insurance policies are there?

The type of life insurance you choose will depend on your individual needs. These include: 

  • level term insurance – this type of policy pays out if you die within the period of time it covers (the term) with a fixed monthly premium. It will pay out the same amount whenever in the term you pass away. Bear in mind – the amount paid out may not keep up with inflation.

  • decreasing term insurance – this type of policy also lasts for a set period of time with a fixed monthly premium, but the amount it pays out decreases as the term progresses. A decreasing term policy is often linked to a repayment mortgage; as the amount you owe decreases over time.

  • whole of life insurance – this type of policy does not have a set period of time and covers you as long as you keep up the premium payments. These types of policies are usually more expensive than term insurance policies. They can be used as part of estate planning, or funeral planning.

  • over 50s plans – available only to people over the age of 50, this type of policy pays a fixed lump sum when you die. However, as you need to pay the premium for life, you could end up paying in more than the cash your family would receive as the level of cover is usually lower and may not keep up with inflation

What life insurance does HSBC offer?

We offer Life Cover to financially support loved ones – with a lump sum payment of up to £2 million – if the unexpected happens. You can choose between level and decreasing cover. Our life insurance calculator can help you find the cover you need. Just tell us what you want to protect and we’ll work out the rest. 

We also offer Critical Illness Cover and Income Cover should you unexpectedly fall ill, or are unable to work due to an accident or injury.   

If you’re looking for other types of insurance, as well as a relatively small amount of life cover, you might be interested in Select and Cover. This multi-insurance policy allows you to choose 3 or more types of cover from £19.50 a month.

The life cover option (Starter Life) would provide a fixed lump sum payment of £15,000 if you, or your partner, pass away. Cover is available up to the age of 50.

Select and Cover is available to HSBC UK customers who are registered for online banking.

Before you buy any insurance product, it’s important to read the policy and understand the details including costs to make sure you get the cover you need. 


Life Cover, Critical Illness Cover and Income Cover are provided by HSBC Life (UK) Limited.

Source: ‘The cost of a child in 2019’ Child Poverty Action Group

Source: Royal London National Funeral Cost Index Report 2019