Life is uncertain and anything can happen. We should be prepared for the worst, just in case.

Life insurance can give you peace of mind, because it’ll give your loved ones a payout if you die during the policy’s term. Having a lump sum would help your family manage the finances when you’re gone.

Do you need life insurance?

The payout from a life insurance policy can help cover any financial commitments you have, which may fall on your family if you die. They could use the payout for mortgage payments, school or university fees. Or it could be used for repaying outstanding debts and recurring expenses. Otherwise, it could just be money for them to live off or enjoy.

Once you’ve decided whether you need life insurance, you can start looking for the best life insurance for your needs.

How does a life insurance policy work?

Life insurance pays out a lump sum payment to your family, or whoever you name on the policy, if you pass away during its term. For the lump sum to be paid, you’ll need to meet the provider’s terms and conditions and pay your monthly premiums.

Life insurance, UK wide, usually only covers you for death. You’ll need a different type of income protection – such as critical illness cover – if you want cover for illness or disability.

Every life insurance policy has its own terms and exclusions. But most life insurance companies don’t pay out if you die due to suicide, a drug overdose or as a result of a risky or reckless act.

When you compare life insurance, you’ll be able to find life insurance quotes for the life cover you're looking for.

What types of life insurance are there?

There are several types of life insurance. They offer different levels of cover to suit your needs. You’ll need to find out about each to work out which life insurance is right for you. Some of the most common types are:

Level term life insurance: This is the simplest life cover insurance. You choose the amount and policy term at the start. It pays out a fixed amount, regardless of when a claim’s made, as long as it’s within the term of the policy.

Decreasing term life insurance: With this policy, the amount of cover decreases over time. It’s generally useful to cover debts like mortgages, which reduce over time. For this reason, it’s sometimes called ‘mortgage life insurance’. It’s usually cheaper than level term insurance and a good option if you’re comfortable with the amount of cover decreasing over time, although the premiums stay the same throughout the term.

Critical illness life cover: This insurance can be added to a life insurance policy. It covers you if you’re seriously ill or are diagnosed with a severe medical condition during the policy’s term. In most cases, critical illness cover pays out a fixed lump sum. The payout can be used to pay for private medicine, a holiday, or to help your family financially during your illness, especially if you can’t work.

Over 50s life insurance: This is for people aged 50 to 80 years old. With over 50s life cover, you don’t have to give a medical history. Anyone in the age range is guaranteed to be accepted. You pay for this kind of life insurance through fixed premiums until you’re 85 or 90, depending on the provider. After that, the premiums end, even though you’re covered until you die. Over 50s life insurance usually comes with a qualifying period that ranges from 12 to 24 months. If you pass away during this period, your family won’t get the lump sum payout, but the premiums you paid in will be refunded to them.

Whole of life insurance: As the name suggests, this kind of insurance covers you for your whole life. You pay a premium each month and it pays out a fixed lump sum when you pass away. With whole life insurance, the insurer invests your premiums into a fund. It spreads the investment across stocks, bonds, property and cash, and pays out from the same fund when you claim. But remember, your premiums might increase to cover the payout, if the investment fund performs poorly. But the amount of cover you receive will be the same.

Joint life insurance: This kind of life cover insurance covers two people together, usually a couple. It usually pays out just once, in a lump sum. This tends to be paid to the surviving person. But when that happens, they won’t be covered anymore and they’ll have to find a new life insurance policy if they still want cover.

How to choose the best life insurance for your needs

The best life insurance isn’t the cheapest one – it’s the one that suits your circumstances best. Start by looking at your debts, your family’s needs and their lifestyle. This’ll help you work out how much life cover your need and how long you need it for. Once you’ve decided, you can think about doing a life insurance comparison to compare quotes.

Choosing the amount and length of cover

Ideally, the amount of cover – known as the sum insured – should be big enough to cover the remaining balance on your mortgage. Then, there should be enough left over on top, to make it easier for your family to cover some of their other expenses when you’re gone.

Think carefully about how the situation might change if you weren’t around. 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.

The term of your life insurance policy should also be at least as long as your mortgage. This’ll make sure the payout covers the remaining balance on your mortgage.

How much does life insurance cost?

The price of your life insurance will depend on factors like:

  • Your age

  • Your medical history

  • Your height and weight

  • Your smoking habits

  • Your alcohol consumption

  • Your salary

  • The length of the policy you want

  • How much cover you want.

For life insurance, UK wide, insurers look at the chance of you unexpectedly passing away and base the price of your quote on this.

For example, a 30-year old non-smoker with a clean medical history might pay less than a 45-year old smoker with a medical condition.

Premiums for most life insurance policies are fixed, which means they never increase. It's a good idea to compare life insurance policies and understand the life insurance quotes UK companies are offering. You should base your decision on what they include. Find out more about how to make a claim on a life insurance policy.

What do life insurance companies cover?

Most of the time, you’ll be covered if you die or are diagnosed with a terminal illness (with a life expectancy of less than 12 months) during the policy’s term.

Even with the best life insurance companies, you usually won’t be covered if you die due to suicide, serious self-injury, a drug overdose or a reckless act. Your cause of death must be covered by the policy if your family is to get a payout. You also won’t be covered if your payments aren’t up to date. You should read your policy booklet carefully so you understand the terms of conditions of your particular policy.

Are you eligible for life insurance?

Most people can get life insurance as long as they’re over 18 and live in the UK.

It might be harder to get life cover if you have health issues, or you might have to pay higher premiums. It’s a good idea to get as many quotes as you can, until you get accepted.

You need to make sure you’re as accurate as possible when you answer the questions during your application, and when you compare life insurance. If you don’t answer truthfully, you might find your policy is invalid when you come to make a claim.

When should you get life cover insurance?

Life cover insurance is a good thing for all adults to think about having, whatever their age. It’s particularly important for people with financial responsibilities like loans or mortgages. And, of course, it’s worth thinking about taking out life assurance cover if you have children or other dependents.

Sometimes people decide to get life insurance when they have a baby or move house. But it’s best to get it at the earliest possible opportunity. The younger you are, the healthier you’re likely to be, and insurers see you as less risky. If you’re healthy, your insurer’s less likely to have to pay out, so they’ll offer you a cheaper premium.