TL;DR
Life cover - key points
Life cover can provide a payout if the insured person dies during the policy term, subject to the policy conditions. Who receives the money depends on how the policy is arranged.
Term cover lasts for a chosen period; whole-of-life cover has no fixed end date. Match the amount and duration to your family’s financial gap, and check premiums, exclusions and existing cover.
Are you afraid that your family won’t have enough to live on when you are gone? Probably everyone who has a family has felt this way at some point. To protect yourself from such problems, you can opt for term life cover.
How does life cover work in the UK?
Life cover can pay a lump sum if the insured person dies during the policy term and the claim meets its conditions. The amount, recipient and exclusions depend on how the policy is arranged.
Term life cover lasts for a chosen period, such as 20 years. Whole-of-life insurance has no fixed end date. The choice depends on how long you need protection.
Why do I need life cover?
A life cover policy in the UK is designed to provide financial security for the people you care about most. It can help them adapt to a new situation and cope with financial commitments. The policy can also provide your loved ones with financial stability and allow them to pay off a mortgage, pay for education or make funeral arrangements. If your partner has a significantly lower income than you and you are jointly paying off a mortgage on your home, you should definitely consider such insurance.
Not everyone needs life insurance. Consider who would face a financial shortfall after your death, which costs you want covered and what resources are already available. Family status alone does not decide whether a policy is useful.
Life insurance policy provides support for your loved ones, even when you are no longer with them.
Life cover primarily addresses the financial effect of death. Some policies also include terminal illness cover, subject to a specific medical definition. A prolonged illness alone is not the same event: compare critical illness cover or income protection if you need protection during illness.
Which life cover to choose in the UK?
There are many different types of life cover policies in the UK. Each person who wants to insure themselves should find the policy that best suits their needs and individual life circumstances. Contrary to appearances, the choice is not at all that simple.
The main types of life cover in the UK include:
- Term life cover – protection for a chosen period. Level cover keeps the insured amount unchanged; decreasing cover reduces it over time and is commonly used for repayment mortgages. The policy is not automatically linked to your mortgage balance, so check the amount and term.
- Whole-of-life insurance – cover has no fixed end date. Payment depends on keeping the policy in force, paying required premiums and meeting its terms. It generally costs more than comparable term cover. Read more about whole-of-life insurance.
- Joint life insurance – one policy covers two people. A typical first-death policy pays once and then ends, leaving the survivor without cover under that policy. Compare this with two separate policies, which can each pay a valid claim.
- Over-50s life insurance – guaranteed-acceptance plans generally do not require medical questions. Entry ages and pricing factors depend on the insurer. An initial waiting period usually restricts the benefit for death from natural causes, and total premiums can exceed the payout. Read more about over-50s life insurance.
You can find out more about life cover policies on the government’s website: What is life insurance?
What affects the cost and application?
Premiums depend on your age, health, smoking status, lifestyle, cover amount, policy type and term. Compare both the price and the policy conditions.
Answer application questions fully and accurately, including questions about existing medical conditions. The insurer may request further medical information; inaccurate answers can affect a claim. Before speaking to an adviser, gather details of your mortgage, household costs, savings and existing cover.
Summary
Our advisers can help you compare life cover against your family’s needs, mortgage and budget. The final decision remains yours.
Speak to an adviser about life cover. All our insurance consultations and advice are free and without obligation; you pay the premium if you choose a policy.
Frequently asked questions
Is life cover compulsory when taking out a mortgage?
There is no general UK legal requirement to have life insurance simply because you take out a mortgage, but check the conditions of your particular lender and mortgage offer. It is different from buildings insurance, which lenders commonly require. Even when life cover is optional, consider how your family would meet the mortgage and other living costs if you died.
How much life cover might I need?
Start with the mortgage balance and other debts, then consider the income your dependants would need for household bills, childcare and other commitments. Take account of savings, existing policies and any death-in-service benefit through work, remembering that workplace cover may end when you leave that job. The suitable amount and term depend on the financial gap you want to cover and the premiums you can maintain; there is no single sum that suits every family.
What is the difference between level term and decreasing term life insurance?
Level term cover keeps the insured amount the same during the chosen term, which can suit family protection or a debt that is not reducing. Decreasing term cover reduces according to the policy schedule and is often used alongside a repayment mortgage. It does not automatically track your actual mortgage balance, so compare the cover schedule, term and assumed interest rate with your borrowing, particularly if your mortgage changes.
Should we choose joint life cover or two separate policies?
A typical joint first-death policy covers two people but pays once, after the first insured death, and then ends. Two separate policies can each pay a valid claim and allow different cover amounts or terms; the survivor’s own policy can continue after the other person dies. Compare the price, the protection each person needs and what cover would remain for the survivor rather than assuming a joint policy pays twice.
Can I have more than one life insurance policy?
Yes. Separate policies can cover different needs, such as a repayment mortgage and longer-term support for your family, and more than one policy can pay if each claim meets its conditions. Insurers may ask about existing cover, your finances and medical history when assessing a new application. Check the overall amount and affordability, and do not cancel existing cover before replacement cover has been accepted and started.
Do smoking and medical history affect eligibility or premiums?
Insurers assess the answers to their health, smoking and lifestyle questions when deciding whether to offer cover and at what price. A medical condition does not automatically mean refusal: depending on the insurer and circumstances, the outcome might be standard cover, a higher premium, particular exclusions or no offer. Answer the questions fully and accurately, because incorrect information can affect the terms of the policy or a later claim.
What happens when a term life insurance policy ends?
Cover normally stops at the end of the selected term, and there is usually no payout or refund of premiums if you are still alive. Any renewal, extension or conversion option depends on the contract; it is not an automatic entitlement. If you still need protection, review your options before expiry, as a new policy may cost more or require a fresh health assessment.
When might a life insurance claim not be paid?
A claim may fall outside the cover if death occurs after the policy has ended or lapsed, or if a relevant exclusion applies. Incorrect or incomplete answers to the insurer’s application questions can also lead to a reduced or refused claim, depending on the circumstances. Check the exclusions and premium requirements before buying, keep your policy details accessible and tell your family how to contact the insurer.