Cover Gap Calculator

What the Cover Gap Calculator does

This calculator gives you a fast, transparent estimate of whether the life cover you hold today is enough to protect the people who depend on you — and, if not, how big the shortfall is. You enter four figures: your annual income, the total life cover you already hold, your outstanding mortgage or property debt, and your years to target retirement. In return it shows a recommended total cover, your existing cover, the resulting cover gap, and the monthly income your family would need to replace. It is aimed at internationally mobile professionals and expats who may have pieced their cover together across countries and employers, and who want a clear-eyed starting point before speaking to an adviser. It sits within our wider suite of protection planning resources.

How the calculation actually works

The engine behind the tool is the income × 10 + liabilities method — one of the most widely used shorthands in protection planning. Your recommended total cover is your annual income multiplied by ten, with your outstanding mortgage added on top. The logic is that ten times income, invested conservatively, can generate or sustain a meaningful replacement income for your household for a substantial period, while the mortgage is a lump-sum debt that should be cleared outright so your family can stay in the home without the monthly repayment.

Your cover gap is then simply the recommended figure minus the cover you already hold. The tool floors the gap at zero, so if your existing policies meet or beat the recommended level it reports “no cover gap detected” rather than a negative number. Separately, it estimates the monthly income your household would need to replace by taking 70% of your gross monthly income — the level a typical income protection policy will insure, reflecting that such benefits are usually paid free of income tax. Where your income is above £250,000, the tool also flags that a universal or whole-of-life policy may be worth considering for estate planning and tax-efficient wealth transfer.

A worked example

Suppose you earn £200,000 a year, hold £500,000 of existing cover (say, a £300,000 personal policy plus £200,000 of employer death-in-service), and have a £600,000 mortgage. The recommended total cover is £200,000 × 10 + £600,000 = £2,600,000. Subtract your existing £500,000 and the tool reports a cover gap of £2,100,000. It also shows a monthly income-replacement figure of around £11,667 — that is £200,000 ÷ 12, taken at 70%. The message is clear: your current arrangements would leave a large shortfall, and the gap is the amount of additional protection you would need to arrange to close it.

Key assumptions and limitations

A rule of thumb is powerful precisely because it is simple — but simplicity has a cost. The income multiple does not know how many dependants you have, how old they are, or how long each will rely on your income. It does not index future costs for inflation, and it does not model specific commitments such as international school and university fees. It also assumes a flat ten-times multiple; higher earners with young children or longer-term dependants are often guided towards fifteen times income, while those close to retirement may need less. Crucially, the tool nets off only the life cover you already hold — it does not subtract your wider net worth. If you hold substantial liquid savings, investments or sellable property equity, your genuine need may be lower than the headline figure. The years-to-retirement field you enter helps frame your planning horizon but does not change the recommended cover, which is driven by income and mortgage alone. For a needs-based calculation that layers debt, income, mortgage and education together, see the DIME method.

How to read your result — and what to do next

If the tool shows a gap, it is telling you that, on a conservative rule of thumb, your family could face a shortfall if your income stopped today. The right response is rarely to buy the exact gap figure off the shelf; it is to understand the shape of your need and structure cover around it. That often means a blend: level or decreasing term assurance to clear the mortgage, family income benefit or additional term cover for ongoing income, critical illness cover for serious diagnoses, and income protection for the risk of being unable to work. If your income triggered the estate-planning flag, a portable international policy or whole-of-life arrangement may also help meet a future inheritance tax liability. If it shows no gap, that is not a reason to stop reviewing — cover should be revisited every two to three years, or whenever your income, mortgage, family or country of residence changes, because a policy written while you were UK-resident may not pay out cleanly once you live abroad.

Whatever the result, treat it as the beginning of a conversation rather than the end of one. A short review with a protection specialist will translate this rule-of-thumb number into cover that is correctly sized, correctly structured and — importantly for internationally mobile clients — valid wherever life takes you. You can also refine the picture yourself with our fuller protection needs assessment.