Life insurance provides financial support to your loved ones in case of your death. It pays out a lump sum or regular payments to help cover expenses like mortgages, debts, or living costs.
1. Types of Life Insurance
There are several types of life insurance policies, depending on your needs:
a) Term Life Insurance (Most Common)
- Covers you for a fixed period (e.g., 10, 20, or 30 years).
- Pays out only if you die within the policy term.
- Cheaper than whole life insurance.
💡 Best for: Young families, mortgage protection, or those who want affordable cover.
🔹 Level Term Insurance – Pays a fixed amount if you die during the term.
🔹 Decreasing Term Insurance – Payout reduces over time (e.g., matches your mortgage balance).
b) Whole Life Insurance (Lifelong Cover)
- Covers you for life, guaranteeing a payout whenever you die.
- More expensive than term insurance.
💡 Best for: Leaving an inheritance or covering funeral costs.
c) Over 50s Life Insurance
- Guaranteed acceptance for people aged 50–85 (no medical exam).
- Usually used to cover funeral costs or small debts.
💡 Best for: Those who want a small, guaranteed payout.
d) Family Income Benefit
- Instead of a lump sum, it pays regular monthly payments to your family if you die.
- Helps cover ongoing household expenses.
💡 Best for: Families who need steady income replacement.
2. How Much Does Life Insurance Cost?
The cost depends on several factors:
| Factor | Effect on Premium |
|---|---|
| Age | Older = Higher cost |
| Health | Pre-existing conditions increase premiums |
| Smoker Status | Smokers pay more |
| Coverage Amount | Higher payout = Higher cost |
| Policy Type | Whole life is more expensive than term life |
Average Monthly Premiums in the UK
- Young, healthy non-smoker: £10–£20 per month
- Over 50s policy: £20–£50 per month
💡 Tip: The younger and healthier you are, the cheaper your policy will be!
3. What Does Life Insurance Cover?
✅ Death from natural causes, illness, or accidents
✅ Terminal illness (some policies pay out early)
✅ Mortgage and debt repayment
✅ Funeral expenses (if included in the payout amount)
🚨 Not Covered (Usually Exclusions Apply)
❌ Death from self-harm within the first 12–24 months
❌ Death from dangerous activities (e.g., extreme sports, unless declared)
❌ Death due to undisclosed pre-existing conditions
4. Do You Need Life Insurance?
✅ You have a mortgage or large debts
✅ You have dependent children or a partner who relies on your income
✅ You want to leave an inheritance for your family
✅ You want to cover funeral costs
🚫 You don’t need life insurance if:
❌ You have no dependents and no financial commitments
❌ Your employer provides death-in-service benefits (some jobs offer 4x salary payout)
5. How to Get Cheap Life Insurance?
💰 Ways to Save Money:
✔️ Get a policy when you’re young – premiums are lower.
✔️ Choose term life instead of whole life (cheaper).
✔️ Compare quotes from multiple insurers.
✔️ Stop smoking – smokers pay up to 50% more.
✔️ Consider decreasing term insurance if you just want mortgage protection.
6. Best Life Insurance Providers in the UK
🏆 Legal & General – Popular & affordable
🏆 Aviva – Flexible policies
🏆 Royal London – Good for over 50s
🏆 Vitality Life – Rewards for a healthy lifestyle
🏆 AIG Life – Comprehensive cover options
💡 Use comparison sites like MoneySuperMarket, Compare the Market, and GoCompare to find the best deals.
7. How to Choose the Right Life Insurance?
🔹 Decide the coverage amount – Enough to cover mortgage, debts, and family expenses.
🔹 Choose between term or whole life – Term is cheaper, but whole life guarantees a payout.
🔹 Check exclusions and add-ons – Some policies include critical illness cover.