How Much Life Insurance Do Expats Need? A Step-by-Step Calculation

Most expats either guess their life cover or copy a rule of thumb. Both can leave a family short, because living abroad changes the sums: your income may be in one currency, your debts in another, and your family may depend on a visa or a job tied to you. This guide shows a four-step way to work out the figure, with a worked example you can adapt.

This guide is general information, not personal advice. Life cover is a regulated product, so take advice before you buy.

Why expats need a different calculation

A UK-based family can lean on the NHS, state benefits and relatives nearby. An expat family often cannot. If the main earner dies, the surviving partner may lose a work visa, a company home or employer health cover. Children may need to leave an international school. The family may also want to return to the UK, which has its own costs.

That is why the usual advice to take a multiple of your salary is only a starting point. A written calculation is more reliable, and it is easy to do. The cover you buy sits within our wider guide to expat life insurance.

Step 1: Add up the debts

List everything that would still need paying if you died:

• mortgages, in the UK and abroad
• personal loans and car finance
• credit cards and overdrafts
• business borrowing you have personally guaranteed

If you have a home loan, check whether you also need a separate policy that pays it off. Our guide on whether expats need mortgage protection covers that question.

Step 2: Work out the income your family would lose

Do not use your whole salary. Use the shortfall: the amount your family could not cover without you.

1. Write down annual household spending.
2. Subtract the survivor’s own income, if they work and would keep working.
3. Subtract any pension or benefit income that would be paid on your death.
4. Multiply the shortfall by the number of years it needs to last.

Choose the number of years carefully. Many families pick the time until the youngest child finishes education. Others cover the time until the surviving partner could realistically retire.

Step 3: Add the costs that are easy to forget

Expat families often have costs that a UK family would not:

• School fees. International school fees can be a large part of the total. See our guide to saving for school fees from abroad.
• Moving home. Flights, shipping and a deposit for a new home if the family returns to the UK.
• Funeral and repatriation. Returning a body to the UK can cost far more than a local funeral.
• A cash cushion. Three to six months of costs while the family decides what to do.
• Inheritance tax. If your estate is large, a policy written in trust can help. Our guide on term vs whole of life for expats explains the options.

Step 4: Subtract what you already have

Reduce the total by anything that would pay out or be available:

• employer death-in-service cover, which usually ends when you leave the job
• existing personal life policies
• savings and investments you would be happy to use
• a lump sum from a pension scheme, which may depend on the scheme rules

Be careful with death-in-service cover. If you are an expat employee, check whether it applies to overseas staff and what happens when your contract ends.

A worked example

This example is illustrative. Your own figures will differ.

• Debts: £250,000
• Income shortfall: £30,000 a year for 15 years, which is £450,000
• School fees and education: £80,000
• Funeral, repatriation and cushion: £25,000
• Total need: £805,000
• Less existing cover and savings: £100,000
• Cover needed: £705,000

A salary-multiple shortcut can give a very different answer, which is why the written sum is worth doing.

Why a salary multiple can mislead

You will often see advice to buy cover worth a set number of years of salary. Published rules of thumb range widely, from around six to ten times income to much higher figures for families with young children. The trouble is that a multiple ignores your actual debts, your partner’s income and your children’s ages.

Compare two families who each earn £80,000. The first has no mortgage, a partner who earns £70,000 and teenage children about to leave home. The second has a £400,000 mortgage, a partner who has stopped work to look after toddlers, and school fees to come. A multiple of salary gives both the same answer. A written calculation gives them very different ones.

Use a multiple as a sense check on your figure, not a replacement for it. If your calculation lands far from the multiple, find out why before you buy.

A second example: a family with one income

This example is illustrative and uses simple numbers.

• Debts: £400,000 mortgage and £20,000 of loans, a total of £420,000
• Income shortfall: the surviving partner could return to part-time work, leaving a shortfall of £40,000 a year for 18 years, which is £720,000
• School fees and education: £150,000
• Funeral, repatriation and moving costs: £40,000
• Total need: £1,330,000
• Less existing cover and savings: £150,000
• Cover needed: £1,180,000

Two things stand out. The income shortfall is the largest item, so it deserves the most care. And because the need falls as the children grow up, a decreasing or layered policy may cost less than a flat one. Our guide to term vs whole of life for expats explains how to layer policies.

Covering a partner who does not work

A partner who looks after children and the home does a job that would cost real money to replace. If they died, you might need childcare, household help or time off work. Cover for a non-working partner is usually smaller than yours, and it is often a lower priority for budgets. It is still worth pricing, because the premium is often modest compared with the exposure.

What affects the price

Once you have a figure, the cost depends on:

• your age and health
• whether you smoke or use nicotine products such as vapes
• the length of the term
• the amount of cover
• your occupation and hobbies
• the country where you live and your residency status

The insurer will ask health questions. Answer them fully, because a missing detail can cause a claim to be refused later. If you are in an unusual situation, such as a high-risk job or a country with limited medical facilities, tell the insurer early and compare more than one.

Does the cover follow you?

A policy that works well in one country may not do so in another. Some UK insurers only cover people who live in the UK. Others restrict cover for residents of certain countries. If you expect to move, build that into your choice and read our guide to whether expat life cover works if you move country.

Choosing the currency of the cover

Match the currency of the cover to the currency of the spending. If your family will stay in a country that uses dollars, cover in sterling exposes them to exchange-rate moves. If the mortgage is in sterling, sterling cover makes sense for that part. Many families split the cover between two currencies. Our guide to currency risk on expat savings covers the same issue for savings.

When to review the figure

Your needs change. Review your cover when:

• you have a child
• you buy or sell a home
• you change jobs or employer cover
• you move country (see what happens to expat life cover when you move)
• your income or debts change a lot
• a child finishes education, because the need reduces

Common mistakes

• Choosing a round figure with no calculation.
• Counting employer cover that ends with the job.
• Ignoring currency.
• Covering the mortgage but not the income.
• Never reviewing the figure.
• Forgetting cover for a non-working partner, whose care and household work would need replacing.

Linking life cover with other protection

Life cover pays on death. It does not help if you are seriously ill or cannot work. Many expats pair it with critical illness cover or income protection. If you are unsure whether a policy would pay out after a move, read does critical illness cover pay out abroad. For the full range, see our expat insurance hub.

Frequently asked questions

How much life insurance does an expat need?

It depends on your debts, your family’s income shortfall, future costs and existing cover. A written calculation is more reliable than a multiple of salary.

Is a multiple of my salary a good guide?

It is a quick starting point. Rules of thumb vary widely, so check the figure against a full calculation.

Should I cover a partner who does not work?

Often yes. Childcare, household work and flexibility would need replacing if they died.

Does employer death-in-service cover count?

It can, but check whether it covers overseas staff and remember that it usually ends when you leave the job.

Which currency should my cover be in?

Match it to where the money will be spent. Many families split the cover between sterling and a local currency.

This article is for information only and is not financial advice. Cover amounts, products and rules vary between insurers. Take regulated advice before you buy.