Life insurance
Understand your options and get the cheapest policy to protect your family's finances
Thinking about how your family would cope financially if you were to die isn't easy. But with roughly one child per school class losing a parent before 16, it’s vital to understand your options. This guide explains how life insurance works, the different types of cover, and how to get the cheapest policy to protect your family's finances.
What is life insurance?
Life insurance is designed to provide financial support to those you leave behind. You pay a monthly premium to your insurer, and if you die during the policy term, your beneficiaries receive either a tax-free lump sum or regular monthly payments.
Most families choose level-term life insurance because it’s simple, good value and pays a fixed amount if you die within a set time. It’s the standard option people use to help ensure their dependants aren’t left struggling with bills or other essential costs.
If you already know what you want, skip down to find out how to buy life insurance the cheapest way. Or, if you've medical issues, see our life insurance with a pre-existing medical condition guide.
What are the different types of life insurance?
There are several types of life insurance, but level-term is the simplest and the one that suits most people, so it’s the main focus of this guide. The other types exist for more specific needs, such as covering a repayment mortgage, providing a monthly income, or planning for inheritance tax.
Below, we outline the main policy types to help you work out which is best for your needs.
Level-term life insurance – the most common and simplest option
Best for: most families, anyone with dependants, also good for renters and for homeowners who want more than just mortgage cover.
Level-term pays a fixed amount if you die within a set time. It's simple, and the name tells you all you need to know:
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Level: you choose how much you need it to pay out – for example, £200,000. This remains 'level', meaning it's fixed at that amount for the duration of the policy.
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Term: how many years you want the policy to cover you – for example, 25 years. You usually can't remain covered past the age of 80, though this maximum age does vary by provider.
The more cover you get and the longer the term, the more it costs. You pay a monthly premium until the policy either pays out (if you die during the term) or the term ends.
Claims for level-term cover are usually straightforward, so provided the insurer is reputable, the cheapest suitable policy is typically fine.
Decreasing-term life insurance – payout reduces in line with your mortgage balance
Best for: covering a mortgage only
Also known as 'mortgage life insurance', decreasing-term life insurance is designed to cover your mortgage if you die during the term. As your mortgage debt usually reduces each year, the amount paid out also decreases in line with your mortgage balance.
Because the payout reduces over time, it's often cheaper than level-term cover. However, if you want to leave a lump sum for your dependants to cover other debts and ongoing costs, a level-term life insurance policy is likely to be a better option (though you can have both). Read more about in our Mortgage life insurance guide.
Family income benefit – provides a regular income
Best for: families wanting a monthly income
Family income benefit pays out a tax-free monthly income for the length of the policy term, rather than a lump sum. You choose the annual amount and duration – for example, £10,000 a year for 10 years. If you died five years into a 10-year policy, your dependants would receive just over £800 a month for the remaining five years.
Because the payout period gets shorter the further you are into the term, the insurer’s risk reduces over time. That’s why family income benefit is often cheaper than level-term cover.
It can be a decent option if you want to ensure your family has a steady income, but remember it won’t provide a single lump sum for major expenses and the total amount paid out depends entirely on when you die during the policy term.
Over-50s' life insurance – guaranteed acceptance but more expensive
Best for: people with health issues who can’t get standard cover
Over-50s’ life insurance is aimed at older adults who may struggle to get traditional life insurance, where the insurer decides whether to accept you and what to charge based on your age, health and medical history.
These policies offer guaranteed acceptance, typically up to age 80 or 85, with no medical questions. But you usually have to keep paying in until you die, and the payout is fixed. That means you could pay more than your family receives, especially if you live for many years.
Because of this, over-50s’ cover often works out as poor value for most people. It’s generally only worth considering if you’ve been declined for standard life insurance. See our Over-50s' life insurance guide for more.
Whole-of-life insurance – usually to cover Inheritance Tax
Best for: covering Inheritance Tax
Whole-of-life insurance does exactly what the name suggests – unlike level-term cover, which ends after a set number of years, this type of policy runs until you die, whenever that is.
These are often (but not always) investment-linked and are mainly used to help cover Inheritance Tax. The idea is that the payout matches or contributes towards the tax bill on death, and because the policy runs indefinitely, a payout is guaranteed as long as you keep up the premiums.
However, whole-of-life cover is usually expensive, and you could still be paying for it long after your mortgage or other debts have been cleared. That makes it poor value for most families who simply want protection while they have dependants.
Joint life insurance – share a policy
Best for: couples who only need one payout
Joint life insurance (sometimes called couples' insurance, partners' insurance or first-to-die cover) lets two people share one policy. You can take it out as either level-term or decreasing-term cover.
It’s usually cheaper than buying two single policies, but it typically pays out only once – usually when the first policyholder dies – and then the policy ends.
Because of this, joint cover is generally only suitable if your partner is your sole dependant and there’s no need for a second payout for children or anyone else. Families who need two separate payouts are usually better off with two single policies instead.
Do I need life insurance?
Life insurance is something every parent, partner, or anyone with dependants should at least consider. If someone relies on your income and would struggle financially without you, a policy can act as a financial lifeline when you're gone.
It’s not compulsory, but many mortgage providers will expect you to have cover in place before releasing funds. This gives them reassurance that the loan could still be repaid if you died.
The benefits of life insurance
Life insurance is a way to ensure those left behind can continue to pay the bills and other essentials, such as:
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Mortgage costs – to clear or pay towards any outstanding mortgage debt.
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Debts and loans – to clear other outstanding borrowing.
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Funeral costs – such as burial and other associated costs.
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Future living costs and expenses – such as rent payments and bills.
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Educational costs – such as school fees or money towards further education.
Is it worth it for you? Key points to consider
Ultimately, it is your decision to weigh up whether the monthly cost is worth it. To help, here are some key points:
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If you don't have dependants, you probably don't need life insurance. If there's no one you'd want the money to go to and no one would be financially affected by your death, a policy offers little benefit.
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If your dependants would struggle without your income, you should seriously consider it. If your loved ones would have problems paying bills without you, it's a way to ease the financial burden.
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Check if you've any cover with your employer. Many employers offer free 'death-in-service' cover. This pays out a multiple of your salary, typically around four times, while you're an employee of that company, so you might not need additional protection. If you change jobs, check the new employer’s policy as cover varies.
If you do need life insurance, it's best to buy it sooner rather than later – it's more expensive the older you get. Even though the term will usually be longer, younger people normally have much cheaper premiums, so save more overall.
How much cover do I need?
If you're considering a policy, you need to think about how much you'd want it to pay out if you died. This can depend on what you can afford each month, but a good rule of thumb is to choose an amount worth around 10 times the annual income of the highest earner.
This may seem high, but it’s usually enough (after factoring in inflation) to cover big costs such as mortgage repayments, childcare, everyday bills and, if needed, to help someone reduce or leave work to care for children or relatives.
A useful way to think about the right amount is to ensure the payout would cover:
Any outstanding debts that need to be paid off (including mortgages).
Immediate outgoings your dependants would need to pay.
Future spending, such as your kids' university costs.
Any additional expenses a death may trigger, such as funeral costs.
If you want a rough figure tailored to your own situation, you can also try a life insurance cover calculator.
How long should the policy last?
This depends on who you're protecting:
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Covering children: Choose a term that lasts until they'd no longer be reliant on you/your partner, so that's generally at least until they finish full-time education.
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Planning more children: Estimate when that'd be rather than trying to extend or get a new policy later, as life insurance normally gets more expensive with age.
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Covering a partner: Pick a term that runs until roughly when you expect to reach pensionable age.
And remember: you don’t need to cover a round number of years – 17, 22 or 27 years are all fine.
Can you have more than one life insurance policy?
Yes. Over time your circumstances can change; debt or living expenses can increase, for example. You might have moved to a more expensive home, or your family might've grown.
When this happens, it's always a good idea to review your finances to make sure any life insurance you have is still suitable – or whether you need to make up a shortfall; either by extending your existing cover or buying an extra new policy.
What will affect my life insurance quote?
Insurers will give you a personalised quote based on the cover you want and the information you provide about yourself (and your partner, if it's a joint policy). The main factors that influence the price are:
1) Your age. In general, the younger you are, the cheaper cover will be.
2) How much cover you want. The greater the payout you're looking for, the more it'll cost.
3) How long you want the cover for. Longer terms cost more, as the insurer is covering you for a greater chance of a claim.
4) Your health and medical history. It's important to disclose any medical conditions, or it could invalidate a policy. Some conditions increase the price, while others may have little effect. See our Life insurance with a pre-existing condition guide for more.
5) Any additional cover you add on. Critical illness is a common add-on that will increase the cost. Read our full Critical illness cover guide to see if it's worth it.
6) How you buy the policy. If you're buying a property, you might be encouraged to take out some form of life insurance by the mortgage company, bank or financial advisor at the estate agent. You don't have to go via them though or use their preferred insurer – they're often much more expensive.
When you buy a policy yourself, you'll have two main routes – Non-advised and Advised. Non-advised is usually cheaper, but you'll need to know exactly what you want. If you're not sure, or have medical conditions, an advised route is likely to be the better option.
How much will life insurance cost?
Life insurance prices vary hugely, so it’s worth getting quotes from more than one place. But unlike with car insurance or home insurance, the cheapest life insurance prices rarely appear on standard comparison sites.
The lowest prices usually come from specialist discount brokers, because they rebate most (or all) of the commission that many insurers and banks keep (a huge chunk of many people's costs) – saving you £1,000s over the full term.
Guaranteed vs reviewable premiums
When buying cover, you'll usually be given two choices of monthly payment:
Guaranteed premiums – your monthly price stays the same for the whole policy.
Reviewable premiums – often cheaper at first, but the insurer can hike the price later, so a cheap deal now may prove costly in the long run.
Most people choose guaranteed premiums because they stay fixed and are often cheaper over the full term.
How much prices can differ
The example below shows how prices vary depending on where you buy the same level-term policy. It’s based on a 30-year-old non-smoker taking out £200,000 of cover over 25 years, with guaranteed premiums. Your own price will depend on your age, health and the cover amount you choose.
Provider | Monthly | Total cost |
Discount broker (non-advised) | £4.90 | £1,495 |
Discount broker (advised) | £6.59 | £1,977 |
Typical comparison site (1) | £6.62 | £1,986 |
Typical direct bank(1) | £9.25 | £2,775 |
Typical direct insurer(1) | £10.67 | £3,201 |
(1) When you purchase online, with no advice.
Prices correct as of October 2025.
This is why it’s important not to just buy life insurance through your bank or direct from an insurer – it’s almost always more expensive for identical cover.
What about decreasing-term cover? Decreasing-term cover is usually slightly cheaper than level-term, but the pattern of pricing by purchase route is broadly the same.
How to buy life insurance
The cheapest way to buy life insurance is usually through a specialist broker, but before choosing one, you need to decide whether you want advice. The cheapest policy isn’t always the best for your circumstances, especially if you have medical conditions or aren’t sure what type of cover you need.
So choose between these two options:
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Non-advised route – Usually best if you know exactly what you want, you don't need the policies explained, and you want the absolute cheapest price.
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Advised route – If you're not sure what kind of policy you need, or you have medical conditions, or you want to speak to an expert, this is the best route. An adviser will check your financial and medical situation and recommend the right policy for you.
Cheapest 'non-advised' brokers – if you know what you want
If you know what you need, these specialist discount brokers tend to offer the lowest prices. Most charge a small one-off fee, usually about £25, and rebate all commission they get from the insurer into your policy (so you basically get a discount, hence the 'discount broker' name). Despite the one-off fee, you can save £1,000s over the life of policy.
Below are the brokers we've found to be the cheapest, and have decent feedback. We'd suggest trying as many as you have time for.
Important. If you do call any of these companies before you buy, make sure you're clear on whether you're getting 'advice' or 'information'. If they're advising you, or pushing you towards one policy over another, they need to do a full check on your financial and medical circumstances and insurance needs, so it'll cost more. Do ask if you're not sure.
Cheapest 'advised' brokers – if you need help choosing
When we researched these brokers, no single provider was consistently cheapest for all scenarios, so it’s worth getting quotes from several. We’ve listed the options below in order of the highest voucher or cashback value for premiums around £30/month. But don't see that as a set order in which to try them, as our research showed different brokers were cheapest for different scenarios.
And remember: don’t be swayed by vouchers alone. If a broker offering a £100 voucher charges even £1/month more than another, that’s £300 extra over a 25-year term.
It’s also worth noting that the non-advised brokers above often offer advised services too, so consider them as well.
New. Up to £405 Amazon voucher. Use this MoneySupermarket* link to answer some initial questions and provide your phone number to get a callback for advice. Once you take out a policy, the voucher amount depends on your monthly premium: starting at £40 and rising to £405 for monthly premiums over £90. | |
Up to £150 Amazon voucher. New ActiveQuote* life insurance customers who use this link to request a callback and take out a policy will get a voucher after six monthly payments have been made. For monthly premiums up to £29.99, you'll be emailed a £100 voucher; if your premium is £30 or more, you'll get a £150 voucher. | |
£90 cashback. Request advice and buy a policy via this Howden Life & Health* link to get £90 cashback. It will be paid after you've made the first six monthly payments. |
IMPORTANT: Get your policy 'written in trust' to avoid tax issues
If you die with an active life insurance policy, the payout forms part of your estate, which could mean it's hit with a huge whack of Inheritance Tax.
Writing the policy in trust when you take out a policy can avoid this. The payout then goes directly to your dependants, so it doesn’t form part of your estate and often speeds up the payment.
If you know what you're doing, you can do this yourself when you take out the policy. If not, ask an advised broker or see our guide on independent financial advisers.
Struggling to find cover?
If you're struggling to find cover and the firms above weren't able to help, or you'd rather find someone local to where you live, head to the British Insurance Brokers Association website and use their 'Find insurance' search. Make sure to select 'Life insurance' when it asks what you'd like to insure.
Already got a policy? You could switch and save if your situation has changed
You’re not tied to your existing life insurance. There’s nothing stopping you from getting a new, and hopefully cheaper, policy. But because life insurance usually gets more expensive with age, savings aren’t guaranteed.
Even so, it’s worth getting fresh quotes, especially if any of the following apply:
You bought your policy directly from a bank or insurer
If you took out cover through your bank or went direct to an insurer without comparing prices first, it's likely you could save by switching policies. Running new quotes won’t affect your current policy, and if you find a cheaper equivalent policy, simply set up the new cover first, then cancel your old one.
As former-MSE Eesha found: "I took out cover three years ago for £23/mth. I then decided to run some new quotes and found the SAME policy with the SAME provider for £9/mth. Over the 15 years that's left I'll save £2,520."
You’ve quit smoking, or no longer have a risky job
Non-smokers pay a lot less than smokers, because they're a lot less likely to die during the term. To count as a non-smoker, you need to have been genuinely nicotine-free for at least a year, and in some cases up to five years, so always check.
One year after you quit, get a new quote and see if you could save big. But don't be tempted to lie. If you die and it is discovered you had been a smoker, it could invalidate the policy. If you are seriously giving up, it's a good idea to get it noted on your medical records to back up any potential claim.
Important: Never cancel an existing policy until your new one is fully in place.
How to complain about your insurance provider
The insurance industry doesn't always have the best reputation for customer service. Plus, while a provider may be good for some, it can be hell for others.
Common problems include claims either not being paid out on time or at all, unfair charges, or exclusions being hidden in small print. It's always worth trying to call your provider first, but, if not, then…
You can use free complaints tool Resolver. The tool helps you manage your complaint, and if the company doesn't play ball, it also helps you escalate your complaint to the free Financial Ombudsman Service.
Life insurance FAQs
You must be open and honest when applying for life insurance. If you leave out or give incorrect information, the insurer could refuse to pay out when your dependants need it most.
When getting a quote, you’ll usually need to disclose:
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your age
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whether you smoke
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your occupation
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your health history and any medical conditions
Insurers use this information to decide whether they can cover you and what the premium should be.
If you're comparing quotes via a discount broker, you'll typically answer a few basic questions to get initial prices. But once you apply to an insurer, you’ll need to give much more detailed medical information, which can change the price or even the decision to insure you.
Because each insurer treats pre-existing conditions differently, it’s worth getting advice before you buy if you have a complicated medical history. Advisers often know which insurers are most likely to cover particular conditions, and at the best price.
If you don’t want to disclose health issues and you’re aged 50 or over, an over-50s’ policy guarantees acceptance without medical questions. But these policies are usually much more expensive, you typically can’t claim in the first few years, and you may get back less than you pay in. See our Over-50s' life insurance guide for full details and warnings.
Life insurance cover is like home, car, travel or pet insurance – if a provider goes bust, the Government-backed Financial Services Compensation Scheme (FSCS) kicks in.
There are two main ways it protects you:
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If your insurer goes bust while your policy is active. The FSCS's main objective is to 'maintain continuity'. It will try to find another provider to take over your policy, or issue a substitute policy.
If you have any ongoing claims, or need to make a claim before a new insurer is found, the FSCS will cover it. -
If your broker goes bust. If you used a discount broker, the only payment you’re likely to have made to them is the small one-off arranging fee (often around £25). If the broker failed after you paid the fee but before the policy was arranged, getting that fee back is unlikely. However, any premiums you’ve paid that have not yet reached the insurer are ring-fenced, so the FSCS can step in to protect those. This protection usually doesn’t extend to broker fees.
How much compensation is covered?
For non-compulsory insurance, including life, home, travel and pet cover, the FSCS protects 90% of the amount owed. In the worst case, that means you could lose up to 10% of the money you've paid in, though in practice you're more likely to be transferred to a new insurer with your cover intact.
Death-in-service is a valuable workplace benefit offered by many companies, but it isn’t a replacement for life insurance. It usually pays out a lump sum of around three to four times your salary if you die while employed by that firm.
However, you might still need separate life insurance because:
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Any death-in-service benefit ends when you leave your job. And your next employer may not offer it.
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It may not be enough. For many families, three or four times their salary won’t cover the mortgage, plus debts and long-term living costs.
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You can’t change the policy. You can’t choose the payout amount, term length or beneficiaries in the same way you can with a life insurance policy.
So while death-in-service can reduce the amount of life insurance you need, it usually can't replace it completely.
Life insurance can pay out after suicide, but insurers usually include a clause at the start of the policy. This means that if the policyholder dies by suicide within the first 12 to 24 months, the insurer may not pay the full benefit.
After this exclusion period has passed, most policies will pay out for suicide as long as you answered all application questions honestly, including disclosing any relevant mental health history. If something was left out or incorrectly states, the insurer may reject the claim.
Insurers may also delay the payout while they investigate the cause of death, especially if an inquest or coroner’s report is needed.
If you have concerns about what to disclose, an advised broker can help ensure your application is completed accurately so the policy remains valid.
Yes, many life insurance policies do give terminal illness cover but you should always double check it is shown as part of the policy. Where it is included, and provided the condition was not pre-existing and you meet the specific criteria in your policy, it should pay out if you are diagnosed with a terminal illness. If you needed to unfortunately claim, the insurer would typically require a doctor to confirm a life expectancy of 12 months or less.
Insurers have a duty to treat customers fairly, as required by the FCA (Financial Conduct Authority), so it can not just refuse to settle a claim. To be fair to life insurers, it is relatively consistent in paying out as the ABI (Association of British Insurers) report in 2024 that almost 97% of life insurance claims were paid.
Having said that, scenarios where an insurer is within there right to refuse to settle a claim should here are some examples why they could refuse to settle a claim.
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Non-disclosure of information when you bought the policy. This could be for not sharing details of a pre-existing medical condition, or inaccurate details, when you purchased the policy.
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Payments not up to date. If you are not up to date with your monthly payments, insurers could view this as the policy not in force, and therefore no cover.
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Policy exclusion. There could be a policy exclusion meaning there is no cover for the cause of death, such as carrying out a dangerous, or illegal, activity, or even your occupation (hence the need to be honest at all times to the insurer).
Should your circumstances mean that you no longer need to, or can't, pay to have a life insurance policy, yes you can cancel it at any time by simply contacting the broker or insurer directly.
When it comes to getting your money back, as a general rule of thumb, this may only be possible if you cancel the policy within the cooling off period - which is usually within the first 30 days of the policy start date though the insurer may want to charge a fee and possibly for the number of days cover has been in force . Once the policy is in force for longer than 30 days, any monthly premium paid belongs to the insurer and will not be returned.
Having said that, if you a whole-of-life policy, there might be a cash surrender value but worth knowing that charges for surrendering the policy would probably apply.
What do I need to disclose to an insurer?
What do I do if the insurer goes bust?
Do I need life insurance if I have death-in-service at work?
Does life insurance pay out for suicide?
Does life insurance pay out for terminal illness?
Can insurers refuse to pay out, and why?
Can I cancel my life insurance at any time, and get my money back?
Looking for life insurance but have a pre-existing medical condition? See our life insurance with a pre-existing medical condition guide.
Over-50s' life insurance? Why you should be wary of it. See our Over-50s' life insurance guide.
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