How much life insurance do I need?
A worked example, what to take off, the main types of cover and why to write a policy in trust.
Flights and a hotel are easy to price. The spending money is harder, because it depends on where you go and how you like to holiday. The simplest way to set it is a daily amount per person, multiplied out, with the costs people usually forget added on top.
In our example, two people spending £65 each a day on food, drink and activities need £910 of spending money for a seven-night trip, out of a total trip cost of £2,375.
Set a daily amount
Split it into food and drink, and things to do. Our example uses £45 a person a day for food and drink and £20 for activities:
| Part of the trip | How it is worked out | Cost |
|---|---|---|
| Flights | £220 × 2 people | £440 |
| Accommodation | £110 × 7 nights | £770 |
| Food and drink | £45 × 2 people × 7 days | £630 |
| Activities | £20 × 2 people × 7 days | £280 |
| Transfers, insurance and extras | whole trip | £255 |
| Total | £1,188 per person, £339 a day | £2,375 |
Where you go makes a big difference
The Post Office prices the same basket of holiday buys, such as a coffee, a drink and a meal, in resorts around the world. In its 2025 Holiday Money Report, the Algarve in Portugal was the cheapest at £58.95, while New York was the most expensive at £167.85. Its Family Holiday Report 2026 found the Algarve cheapest of 22 European resorts and Sorrento in Italy the dearest. The same daily budget goes much further in some places than others.
The costs people forget
- Airport parking, and food and drink at the airport
- Hold luggage and seat selection
- Transfers at both ends, taxis and local transport
- Travel insurance
- Tips and tourist taxes
- Card fees for spending abroad
Paying abroad
Some cards charge a fee on every purchase abroad, often 2.99%, and some debit cards add a flat fee per purchase as well. A card with no foreign transaction fees avoids both. When a shop or cash machine offers to charge you in pounds, choose the local currency instead: Which? found paying in pounds cost up to 13% more in one case.
For trips in Europe, a UK Global Health Insurance Card is free from the NHS website. Use the official site, as unofficial ones charge a fee. The card is not a replacement for travel insurance.
Add a cushion
Ten per cent on top of a fully costed trip is a sensible margin for the things that go wrong or the extras you decide on when you get there. If your figures are rough guesses rather than real prices, make it more.
Plan your own trip
The holiday budget calculator adds up the whole trip, per person and per day. Going with friends? The trip split calculator works out who owes what.
Sources: Post Office, Holiday Money Report 2025 and Family Holiday Report 2026; Which?, The cheapest way to spend money abroad; NHS, Applying for a GHIC. The daily amounts are example figures. Checked 1 November 2026.
This is general information, not financial or tax advice.
It explains published rules and figures. Your own position depends on your full circumstances,
so speak to a qualified adviser before acting on it.