Key takeaways
- UK insurers paid 97.9% of individual protection claims in 2025, and the average individual claim was £19,300 — a figure set by what people bought, not by what their households needed.
- Legal & General's 2025 life and over-50s claims averaged £37,788, on policies that had been running 12 years on average, with the average claimant aged 71.
- Aviva's group life claims averaged £150,700 in 2025 against £21,369 across its individual life and terminal illness book. The employer cover is the bigger number, and it ends with the job.
- Bereavement Support Payment tops out at £9,800 — a £3,500 lump sum plus 18 monthly payments of £350 — and only if the claim is made within 3 months.
- The FCA's protection-gap research counted 50 million unmet needs and 72% of them uncovered, then disclosed that "sum assured adequacy" was never assessed.
Ten times salary skips the only question that decides the number
If you've searched for how much life cover to hold, you've met a multiple. Ten times salary. Five times. "Enough to clear the mortgage." None of them ask what the money has to do after you're gone, which is the only thing that can set the amount.
The calculation underneath has four lines. What you'd want cleared on day one. What income the household loses, multiplied by the number of years it stays lost. Minus the cover already in force. Minus what the state pays. A multiple of salary does the second line badly and skips the other three entirely.
The term question is the same calculation asked sideways. Cover that ends while the need is still running pays nothing at all. Cover that runs on after the last dependant has gone is premium spent on a risk the household stopped carrying. Both errors are invisible until the day someone claims — and by then the policy is what it is.
The debt line is the part almost everyone gets right
Mortgage debt is the largest single item on most household balance sheets. The Bank of England's Mortgage Lenders and Administrators Statistics put the outstanding value of all residential mortgage loans at £1,746.1 billion at the end of the first quarter of 2026. That borrowing is the biggest exposure most families carry, and it doesn't die with the borrower.
The market is built around it. The ABI's own product definition describes term life insurance as paying "a lump sum, commonly used to cover outstanding mortgage payments". The FCA found that pure protection policies are "typically arranged initially for around 25-30 years for term assurance (often aligned with mortgage terms)".
That alignment is why the debt line usually gets computed properly. Someone has the mortgage offer open in front of them. It's also why the rest of the calculation gets skipped: the conversation happens at the point of a house purchase, not at the point of a birth. And plenty of households never get even this far. The FCA's Financial Lives 2024 survey found that more than 40% of mortgage holders lack life insurance.
The income line is a count of years, not a multiple of earnings
Here's where a salary multiple falls apart. Ten times earnings means one thing to a 28-year-old with a newborn and something completely different to a 52-year-old whose youngest has moved out. The multiple contains no term. The need is almost entirely a term.
Official statistics put a hard edge on it. The ONS counts a child as dependent while they are "aged under 16 years or aged 16 to 18 years and who are in full-time education". In 2025, 42.8% of UK families contained one or more dependent children. On that definition the clock runs about 18 years from birth, and it is the same 18 years for every family, which is what makes it a usable starting point.
Households don't stop there. In 2025, 28.7% of adults aged 20 to 34 lived with their parents, up from 25.4% in 2015. Statistical dependency ends at 18 or 19. Financial dependency, for a lot of families, doesn't. Whether you count the university years is a judgement about your own family, and it moves the answer more than any refinement of the income figure.
Put the two together and the headline sum assured starts to look different. The FCA's representative policy for its premium analysis is "a £150k sum assured level term assurance, for a 30 year old, for a 25-year policy". £150,000 sounds substantial. Spread across the 18 years a newborn counts as a dependent child, it's £8,333 a year, before any allowance for inflation, childcare bought in to replace an absent parent, or the fact that the survivor's own earnings may fall.
The first subtraction: cover you already hold and have forgotten
Aviva's 2025 claims data makes this point better than any argument could. Its group life book — the death-in-service cover attached to a job — paid 3,138 claims at an average payout of £150,700. Its individual life and terminal illness book paid 40,277 claims worth £860,665,410, an average of £21,369.
Per claim, the employer's cover was roughly seven times the policy people buy themselves. That is a large number to leave out of a calculation, and it's routinely left out in both directions: some households buy cover they already have, and others count on cover that isn't theirs to keep.
The scale is real. The FCA's Financial Lives 2024 survey found 3.4 million adults held protection through an employer, out of 16.2 million adults holding any pure protection policy at all. Group cover is genuine while the job lasts. It is attached to the employment, not to the household, and it goes when the employment does — a redundancy, a career break, a move to self-employment.
The second subtraction: the state pays £9,800 at most, for 18 months
Almost no needs calculation includes the state, which is odd, because the state does pay something. Bereavement Support Payment at the higher rate is "a one-off payment of £3,500" plus "18 monthly payments of £350" — £9,800 in total. The lower rate is £2,500 plus 18 monthly payments of £100, or £4,300. GOV.UK says the payment is not means-tested, so earnings and savings don't reduce it.
Three conditions do most of the damage to it. The first is contribution-based: the person who died must have "paid a certain amount of Class 1 or Class 2 National Insurance contributions in any one tax year since 6 April 1975", or died from an accident or disease caused by work. A partner with an incomplete record can leave nothing behind here, which is one of the quieter reasons a gap in a National Insurance record matters.
The second is the clock on claiming. You must claim within 3 months to get the lump sum and all 18 monthly payments; past 21 months, GOV.UK says you usually get nothing. A grieving household has a three-month administrative window it probably doesn't know exists.
The third is that it simply stops. Eighteen payments, then nothing, whatever the age of the children. Set £9,800 against the £8,333 a year that the FCA's representative policy would provide across 18 dependent years, and the state's contribution covers a little over one of those years. It's not nothing. It isn't a plan either.
The term question: too short pays nothing, too long pays for a risk that's gone
The ABI defines term life as a policy that "will cover the policyholder for a specified number of years, usually until retirement age". The FCA found terms set at around 25 to 30 years, matched to mortgages. Retirement and the mortgage are the market's two anchors — and neither of them is the date your dependants become independent.
Both anchors can be wrong in either direction. A term matched to the mortgage says nothing about when the youngest child finishes education. A term matched to the children says nothing about the debt that outlives them leaving home. The two needs end on different dates, and a single level policy has to pick one.
Legal & General's 2025 claims data shows what the tail looks like in practice. Across its life and over-50s claims, the average policy had been in force 12 years at the point of claim, and the average claimant was 71. Its terminal illness claims — paid early, on a diagnosis — averaged £125,641, against £37,788 for the life claims themselves.
Read that carefully, because it cuts both ways. Policies that pay out do so, on average, well after the years when a family is most exposed. That's what you'd expect from a book of cover that includes over-50s plans bought to cover a funeral. It also means the industry's claims experience is dominated by claims made long after the dependency window most family cover is bought for.
What actually gets paid, and how big it is
The chart above sets the average payouts side by side. Across the industry, the ABI reported that insurers paid £5.15 billion in individual life, income protection and critical illness claims in 2025, across 258,000 claims, at an average of £19,300. Term assurance paid 96% of claims on 2024 data. Legal & General paid 97.5% of its 13,950 life and over-50s claims, £527 million in total, with a largest single payout of £5 million. Aviva accepted 98.7% of its individual life and terminal illness claims.
The pattern is consistent enough to be dull: on death claims, the money almost always arrives. The uncertainty isn't whether a life policy pays. It's how much, and that was decided years earlier at the application, by someone using a multiple. Income protection is the exception, where the definition of incapacity does the work — the subject of our guide to the definitions that decide an income protection claim.
One more thing the averages hide: a lump sum is not the same as an income. A £150,000 payment arriving in a bereaved household in one piece is a decision problem, not a solution, and it interacts with everything else on the balance sheet — including the inheritance tax thresholds and the taper if the policy wasn't written under trust.
The strongest case against building the calculation at all
There's a serious objection to everything above, and it deserves its best shot. A rule of thumb gets cover in place. A calculation frequently doesn't.
The FCA found that 58% of adults hold no pure protection product at all, and that of those, 59% "had not considered their protection needs". A crude multiple that produces a policy beats an exact answer that produces a spreadsheet and no policy. On that reading, "ten times salary" isn't a bad estimate. It's a device for getting past a decision people avoid.
The precision is partly false, too. A needs calculation assumes an income path, an inflation rate, a family shape and a mortgage term that all hold for two decades. None of them do. The FCA's consumer research found that 34% of its sample had never reviewed their protection needs, so whatever number was computed at outset is the number they still hold.
Here's how the argument settles. The FCA's own protection-gap research identified "approximately 50 million needs" and estimated "around 72% of identified needs are not covered" — and then recorded, in a footnote, that coverage was "defined as holding the product type aligned to the need, sum assured adequacy not assessed". The official measure of the UK protection gap counts whether a household owns a policy. It does not ask whether the amount was ever right. So the rule of thumb wins the argument about whether to hold cover, and nobody has measured who wins the argument about how much.
What the claims data cannot tell you
Start with the composition of the numbers. Legal & General's life line combines term life with over-50s plans, which is why the average age at claim is 71 and the average policy has run 12 years. That is not the profile of a 35-year-old's family cover, and reading it as if it were would understate how young a family claim tends to be.
Payout percentages measure claims accepted, not households made whole. A 97.9% acceptance rate is a statement about insurers honouring contracts. It says nothing at all about whether the sums assured in those contracts matched what the families actually lost. No published dataset answers that, which is the gap this whole piece sits in.
Two insurers are a sample, not the market. Aviva and Legal & General are large, but their books differ from each other and from the industry aggregate, and the ABI's average blends term life, whole of life and over-50s plans into one figure. All of it is backward-looking: 2024 and 2025 claims settle policies sold years earlier, under different pricing and different underwriting.
The Bereavement Support Payment figures are the rates in force in August 2026. Benefit rates are set by regulation and can change. The ONS dependency picture carries its own warning: its 2025 estimates rest on the Labour Force Survey, and the ONS notes that "recent years' lower achieved sample sizes have increased uncertainty".
What would change the answer
The benefit Bereavement Support Payment replaced shows how much the design choice matters. Widowed Parent's Allowance, closed to new claims where the death was on or after 6 April 2017, paid up to £156.65 a week and ran, in GOV.UK's words, "until you either stop being entitled to Child Benefit" or reach State Pension age. It tracked the children. Its replacement runs 18 months and stops. If a future government relinked the payment to dependency, the state line in the calculation grows and the private line shrinks.
If the share of 20 to 34 year olds living with their parents keeps climbing from 28.7%, the years line lengthens for a lot of households, and terms anchored to a mortgage drift further from the need they're meant to meet.
And the rules themselves are in motion. The FCA has said it aims to publish the final report of its pure protection market study in Q3 2026, with remedies aimed at the protection gap. If those remedies push distributors toward sizing cover rather than simply placing it, the gap between the multiple and the calculation becomes something the market has to measure — and right now, on the FCA's own footnote, nobody does.
The one part you can update without waiting for any of that is the debt line. It changes every month you make a mortgage payment, and it's the only input to the calculation you already know exactly. LedgerTouch tracks liabilities alongside assets, so the number you'd need to clear is a figure you can read rather than estimate.