For cancellation insurance to cover a carrier cancelling your flight, your amounts are fairly easy to calculate provided it is a destination served by more than one airline - cost of walk up fare to get home + a night or two hotel / food costs in case there isn't last minute availability on the alternate carrier / flight. 50k would easily cover that for most people, you don't need 5M.

If you are talking about a policy that includes liability, medical etc. then it may well be a different story, but as you specifically said cancellation coverage that is what we were talking about. Any policies including medical for the UK would typically require you to be a resident and registered with a GP (code for entitled to NHS!) as that means all the health care costs once back in the UK are covered by the NHS. I also understand why a liability policy would only cover a resident of the country where the policy was issued - they have their own (in this example) lawyers who can act for you in the UK - they may not be able to do so outside their own jurisdiction.