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For guidance on the best life insurance policies in the UK, read our detailed guide to compare quotes, policies and providers.
Life insurance is a type of protection policy that pays out a cash lump sum or series of regular payments when the policyholder dies. Some policies also pay out when the policyholder is diagnosed with a critical illness or a terminal illness where life expectancy is up to 12 months.
The concept is that if you die, the money from the life insurance payout will support your family financially. You pay for life insurance in monthly premiums for a certain amount of cover, which will be paid to named beneficiaries when you pass away.
There’s no legal requirement to buy life insurance, but having cover in place can give you peace of mind that your family has a financial safety net if the worst were to happen.
You can buy life insurance from a:
According to Statista, in 2020, the top three life insurers in the UK by number of plan owners were Legal & General, Aviva and Scottish Widows.
If you’re single and no one relies on your salary, you probably don’t need life insurance.
There are several types of life insurance policy. This table shows how they differ.
| Runs for a specified term | In place for your whole life | Set payout | Payout increases over term | Payout decreases over time | Fixed premiums | Cost | |
|---|---|---|---|---|---|---|---|
| Term insurance | ✓ | x | ✓ | x | x | ✓ | ££ |
| Decreasing term insurance | ✓ | x | x | x | ✓ | ✓ | £ |
| Increasing term insurance | ✓ | x | x | ✓ | x | x | £££ |
| Whole-of-life insurance | x | ✓ | ✓ | x | x | ✓ or x | ££££ |
Term (or level term) insurance pays out if you die within a given period. If you survive beyond the end of the policy’s term, you won’t receive a payout.
You can choose a term depending on your needs. For example, it might match your mortgage term. The sum that will be paid out is guaranteed and stays the same whenever the policy pays out.
Renewable term insurance is similar to term insurance, but it includes an option to continue the policy beyond the expiry date.
Advantages
Disadvantages
Decreasing term life insurance is a cheaper option. The payout amount reduces each year until it reaches zero at the end of the term.
Decreasing term life insurance is typically used to protect mortgage repayments and is sometimes called mortgage term cover. As you pay off your mortgage over the years, there will be less for the policy to pay off.
Advantages
Disadvantages
Increasing term insurance is more expensive than level term or decreasing term insurance, as the amount the insurer will pay out increases over time to protect your payout against inflation.
Advantages
Disadvantages
A whole-of-life policy guarantees to pay the sum assured on the death of the person, whenever it occurs. It’s a permanent type of life insurance, as coverage never expires (unlike term insurance).
Whole-of-life insurance is more expensive than term insurance, as the insurer is obligated to make a payout at some point.
Premiums can either be reviewable or guaranteed. Reviewable premiums start at a low rate but can rise in time. Guaranteed premiums are more expensive to start with but remain the same throughout the policy.
Advantages
Disadvantages
The right insurance for you depends on your circumstances, budget and what you need the payout to cover.
If you simply want the payout to cover your mortgage – so a loved one doesn’t have to pay it alone if you die – a form of term insurance might be best. However, you can also pick a term not related to your mortgage, such as when your children finish school or university. If you want a guaranteed payout amount, you’ll need whole-of-life insurance.
Some employers offer a death in service benefit: a payment to your family if you die while in their employment (although you don’t need to die while at work). This could mean you need a smaller amount of life cover.
When taking out life insurance, consider the following:
Married or cohabiting couples have two options when it comes to taking out life insurance. They can take out:
A single life insurance policy covers one person. When that person dies, the policy will pay out a lump sum to their beneficiaries.
If a couple buys two single life policies, the policies will be completely independent of each other. The policies can be with different insurers and for different amounts. Each policy will pay out when the policyholder dies.
A joint life insurance policy covers both partners, but only pays out once – after the first death. The policy then ends.
With a joint life insurance policy, both partners must be insured for the same amount, so the payout is the same whoever dies. After the first death, the surviving partner is no longer covered and will need to buy a new policy if they still want life insurance (e.g. to support their children).
A joint life insurance policy is normally cheaper than two single policies but only provides half the cover. It can also make things complicated if the couple separate.
According to Statista, these were the top six life insurers by the number of plan owners in 2020.
| Insurer | Market share (millions) |
|---|---|
| Legal & General | 2.5 |
| Aviva | 2.1 |
| Scottish Widows | 0.8 |
| SunLife | 0.78 |
| Royal London | 0.76 |
| AXA | 0.64 |
| Products sold | Claims paid | Perks | Cover starts from | Fixed premiums | |
|---|---|---|---|---|---|
| Legal & General | Term insurance Decreasing term | 97.9 per cent in 2021 | RedArc wellbeing support | £5 a month | Yes |
| Aviva | Term insurance Decreasing term | 99.4 per cent in 2022 | DigiCare+ app Annual health checks Mental health counselling | £5 a month | Yes |
| Scottish Widows | Term insurance Decreasing term | 99 per cent in 2021 | RedArc Clinic in a Pocket remote GP | £5 a month | Dependant on factors |
| SunLife (Over 50s) | Term insurance Permanent life insurance | 100 per cent | Over 50s specialist Guaranteed acceptance (aged 49-85) | £3.70 a month | Yes |
| Royal London | Term insurance Decreasing term | 99.4 per cent in 2022 | Optional serious illness benefit | £7 a month | Dependant on factors |
AXA no longer sells life insurance directly to consumers in the UK.
It’s important to read the policy documents before taking out life insurance so you know what it covers. As a general guide, here’s what life insurance does and doesn’t cover.
| What is covered | What isn’t covered |
|---|---|
| Death from an illness | Some pre-existing and pre-agreed conditions |
| Murder/homicide | Murder by a beneficiary of the policy |
| Suicide after a year | Suicide in the first year |
| Accidental death | High-risk activities |
| Death from old age | Death due to alcohol/drugs |
How much cover you have will determine the payout your beneficiaries will receive when you pass away.
When calculating how much cover you need, you may want to think about:
The different types of life insurance are described above. Term insurance and decreasing term insurance are the most popular types of life insurance.
These policies are cheaper than whole-of-life or permanent life insurance, as cover only lasts for a set period of time.
Whole-of-life insurance runs until you die, whenever that happens. But with term insurance, the policy will end after a set number of years. For example, if your mortgage has 20 years left to run, you might want a decreasing term policy that runs for this length of time. If you have young children, you might want term insurance to run until they finish full-time education.
Life insurance premiums depend on several factors, which are outlined below. It’s important that any cover you buy is affordable. If you stop paying the premiums, the policy will usually be cancelled, and you’ll lose the money you’ve paid up to that point.
Some whole-of-life policies have an investment element and accrue a cash value, equal to all the premiums you’ve paid plus the returns they’ve earned.
With this type of policy, you might be able to access the cash value while you’re still alive to fund your retirement or long-term care. You might be able to do this by borrowing against the policy or surrendering it, although there could be financial penalties for doing so, so take professional advice first.
An over 50s life insurance plan is a type of whole-of-life insurance policy you can take out from the age of 50 up to a limit (typically 80 or 90). The upper age limit only applies to taking out the policy – it remains in place after you reach this age.
You might take out an over 50s life insurance policy to:
The key difference between life insurance and over 50s life insurance is that there are no medical questions to answer when you take out over 50s cover, and most insurers guarantee acceptance. To be eligible, you simply need to be aged 50 or over. Over 50s policies are whole-of-life, meaning they pay out whenever you die. This means the payout is guaranteed too.
With most over 50s policies, you normally only pay premiums for a set time, such as for 30 years or until you turn 90. After that, you won’t have to pay any more, but you’ll still be covered.
However, these policies are more expensive than other types of life insurance and sometimes work out as poor value, as you may eventually pay more than will be paid out when you die.
Some over 50s policies only cover death from accidents – not illness – for the first 12 or 24 months. If you die of an illness within this period, the insurer will usually only return the premiums paid up to that point.
With over 50s life insurance, you buy a fixed amount of cover. But inflation may erode its value, meaning it might not cover your funeral or other costs when you die.
How much does over 50s insurance cost?
The cost of your over 50s insurance will depend on:
In general, the older you are and the more cover you want, the higher the cost will be.
What is the qualifying period?
Over 50s life insurance doesn’t give you cover from the start if you die from ill health, although accidents are normally covered.
With most policies, there’s a qualifying or waiting period of one, two or three years.
What is a funeral benefit?
Some over 50s plans include a funeral benefit. This is a sum of money added to the payout to your family that will be passed to a pre-determined funeral provider. Although this might sound good, it will tie your family into using a particular funeral firm if they want to use the benefit. Other funeral providers might be cheaper or offer better services.
Who offers over 50s life insurance?
We ran a quote for over 50s life insurance for a 50-year-old woman living in London paying £20 a month. Here are the top insurers.
| Insurer | Cover amount | Qualifying period | Funeral benefit option | Age you stop paying |
|---|---|---|---|---|
| Assurity | £7,984 | 36 months | No | 95 |
| Shepherds Friendly | £7,760 | 24 months | £250 | 80 |
| One Family | £7,417 | 24 months | £300 | 90 |
| National Assurance | £6,653 | 24 months | No | 85 |
| SunLife | £5,872 | 12 months | No | – |
| National Friendly | £5,511 | 24 months | No | – |
Step 1: Decide how much cover you need. You might just want to cover your mortgage and/or household bills or want to cover children’s education expenses too.
Step 2: Choose the type of policy you want. For a guaranteed payout, you’ll need whole-of-life insurance. For a predetermined payout, you’ll need a term policy. Decreasing term insurance is a good option if you want to cover just your mortgage. If you’re 50 or older, look at over 50s policies too.
Step 3: Use a price comparison site to compare premiums, payouts, rewards and any exclusions. You can speak to a life insurance broker to discuss your needs and medical history before making a final decision.
You can compare life insurance quotes on the following websites.
How much life insurance costs depends on:
Life insurance is more complicated than home or car insurance, and there can be consequences for your family if you buy the wrong policy.
You should take professional advice from a life insurance broker before buying cover. A broker has specialist expertise and can advise you about which products best suit your needs.
Brokers don’t usually charge a fee. Instead, they’re paid a commission by the insurance company. They can also arrange for critical illness cover to be added to your policy if this is the right option for you.
Life insurance premiums are affected by your age, your health, your lifestyle, the type of policy and the amount of cover you take out.
The older you are when you begin a life insurance policy, the more expensive premiums will be. You only need life insurance when someone else, such as a partner or child, depends on your income or non-financial contribution to the household.
Critical illness cover pays out a lump sum on the diagnosis of certain conditions, such as a heart attack or cancer. You can choose to add critical illness to your life insurance policy.
Some employers offer life insurance as part of an employee benefits package. It’s sometimes known as a death in service benefit and pays out a lump sum to your beneficiaries if you die while employed by the company. The benefit will stop if you leave your job.
If you’re over 50 and have health issues, a specialist over 50s life insurance policy might be best, as there aren’t any medical questions, you’re guaranteed acceptance and it will cover you for the rest of your life. However, a term life insurance policy might be cheaper, so take professional advice.
You should take out life insurance if someone else, such as a spouse or child, relies on your salary and would struggle financially if you were to die. There’s no legal obligation to buy life insurance. You generally don’t need it if you’re single and childfree.
The right life insurance policy can enable your family to pay off a mortgage and other expenses, such as household bills or education costs. Having cover in place gives you peace of mind that your family would be protected financially if you were to pass away.
