How much life insurance do high earners need?
The standard "10 times salary" rule of thumb applies at any income level — but for high earners, the absolute numbers are larger. Someone earning £150,000 might need £1.5 million of cover to replicate their income for 10 years. Add a large mortgage and dependants, and the figure grows further.
Tax-efficient options for high earners
Relevant life policy (for company directors and employees)
If you're a company director or employee, a relevant life policy allows your employer to pay life insurance premiums from company funds. Premiums are corporation-tax deductible, and payouts are usually inheritance-tax free. This is significantly more efficient than paying personally.
Writing in trust
For high earners, inheritance tax (40% above £325,000 per person) can significantly reduce the value of a life insurance payout. Writing your policy in a discretionary trust takes it outside your estate entirely, ensuring the full payout reaches your beneficiaries.
How high earners should structure their cover
- Separate mortgage protection policy (decreasing term)
- Relevant life policy through the business (for employed high earners)
- Personal level term policy for income replacement (written in trust)
- Critical illness cover for financial resilience during recovery
Frequently Asked Questions
Insurers set limits based on your income and financial circumstances. High earners can typically get cover up to 30–35 times annual income. Above this, specialist underwriting is required.
For company directors and higher-rate taxpayers, a relevant life policy is significantly more tax-efficient than a personal policy. The effective cost saving can be 40–50% compared to a personal policy.