Life insurance pays out a lump sum to your loved ones if you pass away while your policy’s in place.
It can cover any outstanding financial commitments you have - like your mortgage or loan repayments - so your family won’t be left with payments they can’t afford after you’re gone.
Life insurance can provide the reassurance you need that your dependents will be looked after. Think about who you’ll leave behind and if they can cope without your income.
There are three main types of life insurance – choose the one that’s appropriate for you and your dependants.
The simplest type – you decide the pay-out value and duration of the policy at the outset.
If you die within the term of the policy, your dependants will receive the pay-out as a fixed sum. The amount paid out stays the same regardless of when a claim is made.
Also known as mortgage life insurance, it’s designed to cover debts that decrease over time - like your mortgage.
The amount paid out by the policy reduces with time – so if you were to die near the start of the policy term your dependents would receive more than near the end, when there’s less mortgage to pay off.
This can be a cheaper life insurance option than level term. But if your circumstances change, and you increase your borrowing, you might find the amount isn’t enough.
Whether you take out critical illness cover with life insurance or on its own, this type of protection can help you financially if you’re diagnosed with a serious illness.
You’ll be insured for a fixed amount which will be paid to you monthly or in a lump sum which allows you to pay off any outstanding debts you have.
Looking after your loved ones could cost less than you think – policies are available from just £5/month.[2]
Premium costs will depend on your circumstances, so they’re likely to be cheaper for someone in their twenties in good health, than for a smoker in their forties who has suffered previous health problems.
The best way to find a competitive rate is to compare policies, so you get the right cover at the right price.
Deciding how much cover to get and how long to make the policy last for can be difficult decisions. We’ve put together some pointers to help. When you get a quote with us there’s a calculator to help you work all this out.
The term you choose depends on your reasons for taking out the policy. If you want to make sure the mortgage gets paid, get cover for at least as long as the remaining mortgage term. If you want to see your children through university, make sure your cover extends to the year your youngest will graduate.
You’ll have to decide whether to take out level term or decreasing term cover to work out how much you’ll pay in premiums. The higher the amount of cover, the more your premiums will cost.
Make sure it’s enough to cover what you need it to - do you want to pay for your mortgage, funeral, childcare or bills? Do you have any other outstanding debts?
Remember, the sum you choose at the outset might be worth less in real terms in a few decades’ time due to inflation.
Premiums are largely based on your personal circumstances, so you can get a policy tailored to you.
Find out more about how to choose the right life insurance policy for you.
If you’re aged between 50 and 79, you can get a whole of life policy without the need for medical assessments. You’ll stop paying premiums when you reach 85 or 90. There’s usually a short qualifying period at the start of the term.
Find out more >If you’re in a relationship, you could take out a policy that pays out in the event of either of you dying. It can be a cheaper option than holding two policies. But it will only pay out on the first death, after which the cover will end.
Find out more >When you’ve got a little one on the way, thinking about the future is inevitable. If you were to pass away, life insurance could cover childcare costs as well as the mortgage, so your partner won’t have to worry about paying out large sums of money.
Find out more >A pre-existing medical condition can mean fewer life insurance providers to choose from. You might also have to pay a higher premium to have your condition included on your policy. Alternatively, you can choose to exclude your existing illness from your cover altogether but the policy won’t pay out if you die as a result of the excluded condition.
Find out more >It's possible to hold multiple life insurance policies and in some cases this might be worth considering. If, for example, you have an existing policy but need more cover, the most cost-effective way might be taking out an additional policy.
Technically no, but the two terms are often used to mean the same thing. Strictly speaking, life insurance pays out if something happens to you, whereas life assurance pays out when it does. So level term cover is life insurance, whereas a whole-of-life-policy is life assurance.
It’s no different to a standard life insurance policy, it's just tailored specifically to clear any remaining mortgage debt after the policyholder's death. It’s usually a decreasing-term policy to reflect the reducing balance of your mortgage over time. Find out more in our guide.
This is dependent on your circumstances, but the right income protection (IP) policy can be valuable as a stand-alone product or as an addition to life insurance/critical illness cover. Life insurance won’t cover you if you cannot work due to illness or disability. Some IP policies include an element of death cover.
[1]For comparing quotes online, Gocompare.com introduces customers to theidol.com. For help, guidance and advice, Gocompare.com, introduces customers to Assured Futures Limited. Assured Futures Limited is authorised and regulated by the Financial Conduct Authority no. 176392
[2]Your cover will depend on your individual needs, circumstances and the premium you choose to pay
[†]Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites