Life insurance might not be the most exciting financial product—but it can be one of the most important. It’s not just about money; it’s about protecting the people you care about. If you died suddenly, could your partner cover the mortgage? Could your children’s lifestyle and education stay on track?

This guide breaks down the essentials of life insurance in plain English—what it is, how it works, and how to find a policy that fits your life and budget.

What is Life Insurance and why is it important?

Life insurance is a policy that pays out a lump sum (or regular income) to your loved ones if you die during the term of the policy. In return, you pay a monthly premium. The idea is simple: if you’re no longer around to provide financially, the payout helps fill the gap.

You choose:

How much you want the policy to pay out
How long you want it to last
What type of policy you need

Do You Really Need Life Insurance?

Like with all all insurance there’s a key question of do you really need it? Life insurance is worth considering if:

You have a partner or children who rely on your income
You have outstanding debts like a mortgage
You want to leave money behind to help your family
You don’t already have cover through your workplace or mortgage provider

If you’re single with no dependants and no debt, you may not need it right now.

Types of Life Insurance Explained

Type	What It Does	Best For
Level Term	Pays a fixed lump sum if you die during the policy term.	Those wanting to leave a set amount to family.
Decreasing Term	Payout reduces over time, often aligned with a mortgage.	Covering a repayment mortgage.
Increasing Term	The payout increases each year to keep up with inflation.	Protecting the long-term value of cover.
Family Income Benefit	Pays a regular income to your family for the remainder of the term.	Those wanting to replace salary-style income.
Whole-of-Life	Pays out whenever you die, as long as premiums are paid.	Estate planning or covering funeral costs.
Over-50s Plans	Guaranteed acceptance, smaller payout.	Older people looking for simple cover, often for funeral costs.
Joint Life	Covers two people, pays out on the first death (or second, depending on the policy).	Couples wanting shared cover.

What Affects the Price?

Your Age

The younger you are when you take out life insurance, the cheaper your monthly cost will be. Premiums rise with age because health risks increase over time. For example, a healthy 30-year-old will usually pay much less than a 50-year-old for the same amount of cover. Locking in a policy early means you can secure a low rate for the full term.

Health & Medical History

If you have pre-existing medical conditions—such as diabetes, high blood pressure, or a history of heart problems—insurers see you as higher risk and may charge more. Lifestyle choices matter too: smoking, drinking, and your weight can all affect premiums. Some insurers will ask about family medical history as well, so always answer questions honestly.

How Long You Want Cover For

The length of your policy (the “term”) has a big impact on cost. The longer the term, the more expensive the cover—simply because there’s more chance you’ll make a claim during that time. For example, 10-year cover is usually cheaper than 30-year cover. Consider matching your policy term to milestones, such as when your mortgage ends or your children become financially independent.

How Much Cover You Want

The higher the payout you choose (the “sum assured”), the higher your monthly premium will be. Work out what your family would need to clear the mortgage, cover living costs, or provide for education and other expenses. Don’t over-insure—pick a realistic amount for your circumstances to keep premiums affordable.

Add-ons

Extras like critical illness cover (which pays out if you’re diagnosed with a serious illness) or income protection (which pays a monthly income if you can’t work) increase your premiums, but provide valuable extra protection. Decide what’s important for your situation—some people need only life cover, while others want a broader safety net.

Smoking Status

Non-smokers get much cheaper rates—sometimes half the price of smokers—because they are at lower risk for major illnesses. If you’ve quit smoking, most insurers will class you as a non-smoker if you’ve been tobacco-free for 12 months (you may be asked for a test). Being honest about your smoking status is crucial, or claims could be declined.

How to choose the right policy

1

Work Out What You Need to Cover

Start by figuring out what costs your life insurance needs to cover if you’re no longer around. Make a list—this will help you avoid under- or over-insuring.

Mortgage balance: How much is left to pay on your home?
Household bills & living costs: Rent, energy, food, transport, and regular expenses.
Children’s education/childcare: School fees, nursery, university costs.
Funeral costs: Average cost in the UK is now over £4,000.

Being specific helps you get the right level of cover for your family’s needs.

2

Decide on a Lump Sum or Income-Based Payout

There are two main types of life insurance payouts:

Lump sum: A single, tax-free payment (e.g. £300,000) your family can use however they need.
Family income benefit: Instead of a lump sum, your family receives a regular monthly income (e.g. £2,000/month) for a set period, helping to replace lost salary and maintain their standard of living.

Think about which would suit your family best: a big payout to pay off debts, or a steady income to cover day-to-day costs?

3

Choose a Term That Matches Your Needs

The “term” is how long your policy lasts. Think about major life milestones when you may no longer need cover, for example:

Until your mortgage is paid off
Until your children are financially independent
Until you reach retirement age

Matching your cover to your needs ensures you’re not paying for protection you don’t require.

4

Pick a Payout Style

Guaranteed premiums: Your monthly payments stay the same for the life of the policy. Simple and easy to budget for.
Reviewable premiums: Payments can increase over time (often after a fixed initial period). These may start out cheaper, but can become expensive later on.

Guaranteed premiums give peace of mind for most people, but reviewable premiums might suit those wanting a lower starting cost and who can afford increases in the future.

5

Decide Between ‘Advised’ and ‘Non-Advised’ Routes

Advised: Speak to a regulated broker (like LifeSearch or ActiveQuote). They’ll recommend the best policy for your needs, help with paperwork, and even support your family if a claim is needed. This route is best if you want guidance and personalised help.
Non-Advised: Use comparison sites like Cavendish Online or MoneyMinder to pick your own policy. This can be cheaper, but you’ll need to research options, check the terms, and make decisions yourself.

Either way, make sure you understand what you’re buying and check the details before you commit.

Tips to get the right cover

Buy young – Prices go up with age

Why act early? Life insurance is cheaper when you're younger and healthy. If you wait, the monthly cost rises as you age or if you develop health issues. Buying early locks in a lower premium for the full policy term—and you’ll often avoid tricky health checks later on.

Consider joint vs. single cover

Couples, read this! Joint policies (covering two people) pay out just once, usually after the first partner passes away. Two single policies may cost a bit more but can pay out twice—once per person—and each partner keeps their own cover if you separate in future. Flexibility and extra peace of mind, for just a little more.

Don’t over-insure

How much is enough? Calculate the money your loved ones would actually need—think mortgage, living costs, debts, kids’ expenses. There’s no need to pay for a massive £1 million payout if £300,000 would cover everything. Being realistic can save you a lot on premiums.

Check what’s included

Read the policy details! Most policies cover death from illness or accident, but there are sometimes exclusions—like suicide in the first year, or deaths from risky hobbies. Always double-check the terms so your loved ones aren’t caught out later.

Use a comparison site – but always read the small print

Don't buy on price alone. Comparison sites make it easy to check lots of quotes, but the cheapest option isn't always the best. Look for strong customer reviews, clear terms, and the right cover for your situation. Always read the details and exclusions before you buy.

Declare everything honestly

Full honesty = valid cover. Always answer health and lifestyle questions truthfully—even if it means a slightly higher premium. If you don’t, your insurer could refuse to pay out, leaving your family without the money they’re counting on.

Check if you already have cover

Already covered? Some employers offer free life cover, and it’s sometimes bundled with a mortgage. Check what you already have, including payout limits, to see if you really need a new policy—or just need to top up.

Finding a policy

We can’t recommend specific insurance policies, but you we have listed some common brokers/ providers below to help you with your search:

Summary

Life insurance isn’t about you—it’s about those you’d leave behind. It helps protect your family’s financial future when you’re no longer around to do it yourself. Whether you want to cover a mortgage, replace your income, or simply leave something behind, there’s a policy that can suit your needs and budget.

Take time to compare your options and consider speaking to a broker if you’re unsure. A little effort now could give your loved ones huge peace of mind later.

Life Insurance