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*Cover from £4.42 a month, based on £150,000 of level-term cover for 25 years for a 30-year-old non-smoking male with no pre-existing medical conditions (April 2023)

Fact checker
Last updated
December 20, 2023

What is life insurance?

Life insurance helps to protect your beneficiaries by paying out a lump sum or a regular income if you pass away during the policy's term. 

In general, life insurance only covers you in case of death. You need a different type of income protection – such as critical illness cover – if you want to be protected financially should you become ill or disabled.

Life is uncertain so we should be prepared for the worst, just in case."

Do I need life insurance?

There's no rule that says you have to have life insurance. But you may want to consider it if you’d have financial commitments that your family would struggle to meet should you die.

For example, payouts from life insurance companies can help clear the mortgage or pay university fees. It could also be used to repay outstanding debts, cover recurring expenses or compensate for your lost income.

Plus, it's not just the principal wage earner who needs life insurance. If you have young children, losing your partner invariably means higher childcare costs for the remaining parent or a lost source of income. A suitable policy can help remedy this.

In 2022, protection insurers paid out[1]
£6.85billion

What type of cover is the best life insurance?

Critical illness life cover

This covers you if you become seriously ill or are diagnosed with a severe medical condition (one that stops you from working but isn't terminal) during the policy’s term. In most cases, critical illness cover pays out a fixed lump sum. It can be added as an extra to another life insurance policy.

Whole-of-life cover

This covers you for your entire life. You make a payment  each month and it pays out a fixed lump sum when you pass away. With whole-of-life insurance, your premiums might increase but the amount of cover you receive will remain the same.

Over-60s life insurance

This cover is designed for people between 60 and 80 years old and can be obtained without handing over any medical details. You pay fixed premiums until you’re 85 or 90, depending on the provider, after which time the premiums end, although you’re still covered until you die. Some providers also offer over-50s cover.

Level-term insurance

This is the simplest life insurance, though not necessarily the cheapest. When you take out the policy, you choose the amount of money you want your beneficiaries to receive and how long the cover will last. It pays out a fixed sum, regardless of when a claim is made, as long as it’s within the policy term.

Joint-life insurance

In general, this type of policy covers two people, usually a couple, but it can be taken out by business partners. It only pays out once, and the payment is usually in the form of a lump sum and tends to be paid to the surviving individual. The survivor usually has to take out a new life insurance policy if they want their beneficiaries to receive something after they die.

Decreasing-term life insurance

With this type of insurance, the amount of cover decreases over time, although premiums stay the same. It’s usually cheaper than level-term insurance and works well to cover debts, like mortgages, which reduce over time.

What type of cover is the best life insurance?

Critical illness life cover

This covers you if you become seriously ill or are diagnosed with a severe medical condition (one that stops you from working but isn't terminal) during the policy’s term. In most cases, critical illness cover pays out a fixed lump sum. It can be added as an extra to another life insurance policy.

Whole-of-life cover

This covers you for your entire life. You make a payment  each month and it pays out a fixed lump sum when you pass away. With whole-of-life insurance, your premiums might increase but the amount of cover you receive will remain the same.

Over-60s life insurance

This cover is designed for people between 60 and 80 years old and can be obtained without handing over any medical details. You pay fixed premiums until you’re 85 or 90, depending on the provider, after which time the premiums end, although you’re still covered until you die. Some providers also offer over-50s cover.

Level-term insurance

This is the simplest life insurance, though not necessarily the cheapest. When you take out the policy, you choose the amount of money you want your beneficiaries to receive and how long the cover will last. It pays out a fixed sum, regardless of when a claim is made, as long as it’s within the policy term.

Joint-life insurance

In general, this type of policy covers two people, usually a couple, but it can be taken out by business partners. It only pays out once, and the payment is usually in the form of a lump sum and tends to be paid to the surviving individual. The survivor usually has to take out a new life insurance policy if they want their beneficiaries to receive something after they die.

Decreasing-term life insurance

With this type of insurance, the amount of cover decreases over time, although premiums stay the same. It’s usually cheaper than level-term insurance and works well to cover debts, like mortgages, which reduce over time.

How to choose the best life insurance

It’s important that you find the right cover for your needs, so here are three things to consider during the decision-making process:

Think about the type of cover

The best life insurance is not the same as the cheapest life insurance quote; the best life insurance is the one that suits your circumstances. Not all policies are the same, so it's worth thinking about the type of cover you need from the outset.

Work out the length of cover

You can start by looking at your debts as well as your family’s needs and lifestyle. This will help you work out how much life cover is required and how long it needs to be in place.

Compare quotes

Once you’ve decided what it is you need to buy, you can compare life insurance quotes to get the best deal.

How much life insurance cover do I need?

The amount of cover – also known as the sum insured – should be sufficient to pay the remaining balance on your mortgage. It should also provide a little extra to make it easier for your family to cover some of their other expenses after you’re gone.

But it's not just the mortgage that needs covering. Think carefully about how the situation might change if you passed away. 

For example, if you work part-time so you can look after your children, what would your partner do if you weren’t around anymore? They might need to pay for childcare, or they might need to work less. Either way, it would affect their financial situation.

How much does life insurance cost?

Life insurance costs between £5 and £100 per month depending on the type of cover you want and your personal situation.

The cost of life insurance is affected by your:

  • Age

  • Medical history

  • Height and weight

  • Smoking status

  • Alcohol consumption

  • Salary

  • Policy duration

  • Sum insured


The best life insurance can give you peace of mind, but don't just go for the cheapest option – find the best cover for your family's circumstances."

What does life insurance cover?

Covered

Accidental death
Unexpected illness/disease
Cancer
Heart attacks

Not covered

Pre-agreed conditions
Tobacco, drug and alcohol abuse
Dangerous activities
Undisclosed health issues

When should I get life insurance?

All adults should think about life insurance, whatever their age. However, there are some occasions when you should strongly consider either taking out a policy or reviewing your existing cover.

These include:

  • Purchasing a house with a partner – should the worst happen to either of you, life insurance could help the surviving partner by covering the mortgage

  • Becoming parents – another key motivation for taking out cover is to provide for your children should the need arise

  • After your children leave home – if you took out cover to cover university, school fees or childcare in case you died, you should review your cover once they leave home

  • Once your mortgage is paid off – once you have paid off your mortgage, ask yourself if you still need life insurance (or cover at your current level)

Am I eligible for life insurance?

Most people over the age of 18 who live in the UK can get life insurance.  But, insurers may be more reluctant to accept you if you have health issues - and many charge more if they agree to cover you. As usual, it’s a good idea to compare quotes from as many providers as possible until you find a suitable policy.

Older people sometimes struggle to find life insurance with major providers too, but there are specialist insurers that are willing to cover more mature applicants.

- You need to be as accurate as possible when applying for cover. If you don’t answer truthfully, you might find your policy is invalidated when  a claim is made.

When you apply, you need to make sure you’re as accurate as possible when you answer the questions."

FAQs

Is life insurance guaranteed to pay out?

Life insurance is only guaranteed to pay out if your cause of death is covered in your policy, and you die during the term of the policy. Here is more on how life insurance works.

Can I have more than one life insurance policy?

Yes, you can have more than one life insurance policy. However, a single policy offering the exact cover you need may prove cheaper.

Can I get a joint life insurance policy?

Yes, you can have a joint life insurance policy but both parties must qualify for the policy and be accepted by the insurer when you apply.

Can I still get life insurance if I have poor health?

Yes, you can still get life insurance if you have poor health. However, not only is it more difficult to find cover, but you’re also likely to pay more than someone in better health.

Explore our life insurance guides

Find out more about how life insurance works and whether it's right for you
Which life insurance policy is right for you?
Which life insurance policy is right for you?
How to claim on a life insurance policy
How to claim on a life insurance policy
What is a whole of life insurance policy?
What is a whole of life insurance policy?

About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. The latest figures from the Association of British Insurers (ABI) and Group Risk Development. People experiencing bereavement, illness and injury have been supported with £6.85 billion in insurance pay-outs from both group and individual protection policies in 2022.