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Life insurance

COMPARE LIFE INSURANCE QUOTES FROM £3.50 PER MONTH^

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^ 51% of our under 30-year-old, non-smoker customers were quoted less than £3.50 per month for their 10-year decreasing term life insurance policy, up to £100k worth of cover, no critical illness cover in December 2023.

Compare life insurance quotes from 22 trusted providers[2] including:

[2] Correct as of March 2024.

What is life insurance?

Life insurance helps give your family financial protection should you die during the policy term. It’s a type of insurance policy that allows you to leave behind money to help your loved ones clear outstanding debts and continue to pay the bills when you’re gone.

The pay-out from a life insurance policy is typically made as a lump sum. However, some policies allow you to arrange a regular income if you prefer.

Your age, health and lifestyle all affect how much you’ll pay for life cover, as do the type of policy you want and how long you need it for.

What are the benefits of life insurance?

There are many reasons why you might want to consider life insurance. A life insurance payout could:

  • Help provide financial security for loved ones
  • Compensate for the lost earnings your family relies on.
  • Help pay any unpaid debts your loved ones may be liable for.
  • Cover your outstanding mortgage repayments, so your loved ones won’t be at risk of losing the family home.
  • Can be put towards unpaid debts, such as a mortgage, that fall to loved ones.

If you’re also worried about what would happen if you became seriously ill, you could take out life insurance with added critical illness cover. Some add-ons, like critical illness, can help towards lost earnings, but you’ll need to meet your insurance provider’s definition to qualify.

Do I need life insurance?

It seems there are certain events in a person’s life that prompt them to buy life insurance. The right policy can offer the reassurance that their family has a financial safety net during the worst of times.

However, life insurance isn’t for everyone. You might not need it if:

  • You’re single with no dependants
  • Your partner earns enough for your family to live on
  • Your mortgage is paid off and you’ve built up savings to cover expenses
  • You have a death in service benefit through your employer that would provide your family with enough money to cover any bills.

Even if you don’t need life insurance right now, your circumstances might change in the future, so it’s always worth thinking ahead. The younger you are when you take out life insurance, the cheaper it’s likely to be.

How does life insurance work? 

Life insurance pays out on the policyholder’s death.

  • If you have a joint life insurance policy, the money will usually go to the surviving policyholder when you pass away, unless you made other arrangements. If you and your partner separate, you may be able to split your joint policy into single policies.
  • If you have a single life insurance policy, the money will be paid into your estate.

Here’s where it’s really important that you make your wishes known. If you want to choose a beneficiary (the person who will benefit from the lump sum payout from your life insurance policy), you could consider placing it into a trust.

Alternatively, you can choose a policy that will give your family regular financial support for an agreed amount of time, in the form of an ongoing monthly payment. This is known as a family income benefit policy. 

When taking out a life insurance policy, you’ll want to consider the following:

Cover amount

The income your family or dependants will need to cover living costs without your contribution – for example, mortgage or rent, debts, childcare, education and funeral costs.

Length of policy

Think about your circumstances and how they might change with time. For example, how long your dependants will need financial support or when your partner expects to retire. 

Joint vs single life policy

A joint policy can often be cheaper, but it only pays out once – when the first person dies. With separate policies, when one pays out, the other policy will continue.

Did you know? According to the Association of British Insurers (ABI), 97.5% of all life insurance, income protection and critical illness claims were paid in 2022, totalling £6.85 billion.

A simples guide to life insurance

If you’re wondering whether you need life insurance, how it works and when’s the best time to get cover, here’s what you need to know:

The information in this video is available as a text transcript

How much cover do I need?

The best level of life insurance cover for you will depend on your personal circumstances. Typically, the more cover you take out, the higher your life insurance premium will be. However, underestimating could leave your loved ones short.

Don’t forget to take account of how your circumstances might change. If a non-working partner dies, you may face additional childcare costs or costs for caring for an elderly parent.

If a working partner dies, you may need to work fewer hours to be there for your children or other dependants. Learn more about why life insurance isn’t just for family breadwinners. 

Life insurance calculator

If you’re looking for the price of life insurance, our cover calculator is the first step. You’re just a few questions away from knowing the minimum amount of cover you’re likely to need to make sure your loved ones are protected.

Calculate now

Prefer to talk to someone?

Compare the Market life insurance comparison and telephone service is provided by LifeSearch. They can help make life insurance feel less complicated. Give them a call free of charge on:

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What are the main types of life insurance cover?

You can get different types of life insurance policies designed to suit different needs. The two main types are:

Level-term life insurance

A level-term policy is predictable. It covers you for a fixed period of time, during which you’ll pay fixed monthly premiums. If you die within the term of the policy, your loved ones will get a fixed payout.

 

Advantages

  • Fixed premiums, for predictable budgeting.
  • A fixed payout gives peace of mind because you know exactly how much your loved ones will get.

Disadvantages

  • Can be more expensive compared to a decreasing-term policy.
  • Set payout doesn’t account for inflation so could be less valuable in real terms.

Learn more about level-term life insurance

Decreasing-term life insurance

A decreasing-term policy also covers you for a fixed term, but instead of paying out a fixed amount when you die, the payout decreases over time. It’s aimed at people whose financial commitments should reduce over time. For example: as you pay off the mortgage and your children leave home.

Advantages

  • Can be cheaper than level-term insurance with lower monthly premiums, so can be a good option for homeowners on a budget.
  • Works well to protect a repayment mortgage and ease the financial pressure of paying off debts from your loved ones. 

Disadvantages

  • Size of payout decreases over time so paying into the policy gradually becomes less valuable.
  • Often only covers a mortgage, so there could be next to no payout towards the end of the policy term.

Learn more about decreasing term life insurance

Other types of cover

Increasing cover

Offers protection against inflation. Your payout (and premiums) will increase to reflect the additional level of cover your family may need to cope with an increased cost of living. 

Best for: taking account of increasing prices, pay rises or growing financial commitments during the policy term.

The downside: increasing-term policies are typically more expensive than decreasing or level-term life insurance. Your premiums will increase every year, sometimes above inflation.

Whole of life insurance

As long as you keep up with the monthly payments, this offers a guaranteed payout whenever you die.

Best for: covering inheritance tax payments and offering ultimate peace of mind that your family will receive a payout, regardless of when you die.

The downside: typically, one of the most expensive types of life insurance policy.

Learn more about whole of life insurance

Joint life insurance

A single policy that covers both you and your partner. It can be cheaper than two separate polices but only pays out once, when the first person dies.   

Best for: couples to cover a mortgage. But depending on your circumstances, you may get better value from two single life policies, so check carefully.

The downside: if your relationship ends, you may not be able to split the policy, in which case you’d lose everything you’ve put in.

Learn more about joint life insurance

Over-50s life insurance

Doesn’t require you to answer health questions but tends to offer smaller guaranteed payouts. If you live for a long time, you could end up paying more in than the policy pays out. 

Best for: over-50s to cover funeral costs and outstanding bills, or to leave a small gift.

The downside: policies can have a waiting period of one to three years before they pay out. If you live a long life, it’s unlikely to be the best-value option when it comes to providing for your loved ones.

Learn more about over-50s life insurance

Critical illness cover

Covers you in the event of serious illness or injury. Usually available as a life insurance policy add-on, combining your protection in one policy. However, if you use a combined policy rather than taking out two separate policies, the life cover will stop if you make a successful claim for critical illness

Learn more about critical illness cover

Income protection

Income protection insurance pays a regular income if you can't work because of sickness or disability, which continues until you return to paid work or you retire.

Learn more about income protection insurance

What does life insurance cover?

Knowing what life insurance could cover is important so that you understand how you can support your loved ones after you’re gone.

What’s covered:

Life insurance covers many common causes of death. But check any policy you’re considering because some providers won’t cover genetic illnesses or conditions like cancer or heart issues.

What’s excluded:

Policies typically won’t pay out for deaths caused by:

  • Any pre-agreed conditions, such as those that are genetic or pre-existing.
  • Drug and alcohol abuse.
  • High-risk activities – like dangerous sports.
  • Committing a criminal offence or provoking an assault.

Always check the summary cover, limits and exclusions to help you make an informed decision before purchasing any insurance.

What you should know:

  • Your policy may or may not cover suicide or self-inflicted injury. At the very least, most policies will have clauses, such as only paying out if more than 12 months have passed since you took out your policy or increased your cover.
  • Your provider will likely not pay out if they find that you provided untruthful or inaccurate information when taking out the policy.
  • Policies will normally not pay out for total disability in your lifetime, unless extra cover is added on.
  • Some policies may pay out early if you’re diagnosed with a terminal illness and your medical team consider you have less than 12 months to live.
  • If you stop paying your premiums, your policy will be cancelled and you won’t receive a payout.

How much could life insurance pay out?

How much a life insurance policy could pay out depends on the type and amount of cover you have.

The average individual life insurance payout in 2022 was almost £73,600, according to the ABI (Association of British Insurers). But your beneficiaries could get a lot more or less than this based on your monthly premiums and your chosen provider.

You’ll be told exactly how much the payout will be when you get a life insurance quote.

What do I need to get a life insurance quote?

We need just 4 minutes of your time[4] and the following information to give you a personalised quote:

  1. Information about you – your name, date of birth and contact details.
  2. Information about your health – your medical history, including any pre-existing medical conditions. Learn more about life insurance and pre-existing medical conditions.
  3. Your lifestyle – you’ll be asked about your smoking habits or if you use nicotine substitutes. 
  4. Details of any joint policyholder – if you want to cover your spouse or partner, you’ll need their details too.  

The list of quotes we provide will also show you optional extras you might want to consider, like critical illness cover. 

[4] Correct as of March 2024.

How much is life insurance?

The price of life insurance depends on the type and level of cover, as well as the age and health of the policyholder. Here’s an idea of what you can expect to pay[3]:

Amount insured Monthly premium Annual premium
£175,000 £8.39 £101

[3] 51% of our customers were quoted less than £8.39 per month for their life insurance for a 10-year term, up to £175k worth of cover and no critical illness cover in December 2023.
   51% of our customers were quoted less than £100.68 per year for their life insurance for a 10-year term, up to £175k worth of cover and no critical illness cover in December 2023.

The prices on our site are for customers in good health. If you have any medical conditions, the life insurance price you see is unlikely to be the one you’ll finally receive.

What can affect the price of life insurance?

Policy type

The features of the policy you choose will influence the cost. For example, decreasing-term policies typically cost less than level-term policies. But it’s important to choose the type of policy that works best for you.

Amount of cover

The higher the amount of payout you might need, the more you’re likely to pay.

Policy length

The longer your policy lasts, the more you’ll pay in total – but you’ll be protected for longer.   

Age

The cost generally increases with age as you’re more likely to develop health conditions.

Height and weight

Used to calculate your Body Mass Index (BMI). In general, a higher than healthy BMI is linked to an increased risk of certain health conditions, like type two diabetes and heart disease.

Medical history

To assess the risk involved in offering you a policy. Your family medical history also plays a role, as your provider will want to know about any serious medical conditions that have affected your family and that you may be more likely to suffer from.

Lifestyle

You’ll be asked about your smoking habits or if you use nicotine substitutes, as well as your alcohol consumption. Some insurance providers may also take into account any high-risk hobbies you have when calculating your premium.

Occupation

If you have a high-risk job, such as working for the police or in the armed forces, this may bump up your premiums.

Mental health

If you have a history of mental illness or suffer from a condition such as depression or anxiety, it could affect your premiums. Find out more about how mental health affects life insurance.

Expert tips and guides

Life insurance can seem complicated and it’s important to understand all your options. We’re here to make it as simple as possible. Check out some of our useful guides:

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Buy your life insurance online through Compare the Market and claim an Amazon.co.uk gift card from £25 to £205**.

To claim the gift card you must make three monthly payments in a row. 

Important things to note:

  • Amazon.co.uk gift card value dependent upon your monthly premium and insurance provider. See full terms and conditions.
  • Offer available for policies applied for online – please note this is an updated offer for all applications made from 1 April 2024.
  • You’ll be contacted to claim your Amazon.co.uk gift card up to 45 days after paying your third monthly premium.
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Author image Faith Archer

What our expert says...

“To be confident that your family will be taken care of financially once you’re gone, it’s important to have the best life insurance policy. But that can mean different things to different people.  

“Price isn’t everything when looking for the best life insurance to suit your needs. To make a start, consider how much your family would need to get by if you weren’t around. Clearing the mortgage might not be enough if they can’t afford food and heating.

“And remember, you’ll find that the younger you are when you take out a policy, the cheaper it’s likely to be.”

- Faith Archer, Insurance expert

How can I get cheap life insurance?

While the price of your life insurance premium is a key consideration, the cheapest policy might not always be the best life insurance policy for you.

If you want to save money without reducing your level of cover, check out these tips and compare life insurance quotes:

1. The earlier, the better

The older you get, the greater your chance of developing health problems. So, taking out life insurance when you’re young and healthy could cost less than starting a policy in later life.

2. Stay healthy

Healthier lifestyle choices like exercising, a well-balanced diet and not smoking could make you a lower risk and help you save money on life insurance.

3. Buy life insurance with critical illness cover

Combining critical illness cover with your life insurance can often work out cheaper than buying two separate policies. 

4. Choose the right policy type

Choose a policy that best suits your needs – for example, term life insurance can be limited to a set number of years, offering cheaper premiums and a high level of cover when it’s needed most.

5. Check your cover every now and then

Review your policy to make sure it still meets your needs, especially if there have been major changes in your life, like marriage, new family members or divorce.

6. Shop around

As well as price, check cover levels and exclusions of different policies to make sure you’re getting value for money.

Get life insurance quotes in less than 4 minutes[4].

Frequently asked questions

How do I make a claim on a life insurance policy?

You can usually make a claim on a life insurance policy either by phoning the policyholder’s provider or filling in an online claims form. You’ll typically need to provide:

  • The policy number
  • The name of the person who has died
  • The cause and date of death
  • Your details and relationship to the deceased.

The provider should then explain what happens next. Anyone can start the claims process, but payouts will only be given to beneficiaries named on the policy.

How long will it take to get a payout on a claim?

The length of time it takes to receive a life insurance payout after making a claim can vary. But, generally, once the provider has all the paperwork they need and has agreed to settle the claim, the beneficiaries can expect to receive the payment within five working days.

Is my life insurance still valid after I’ve finished paying for my mortgage?

If you have mortgage life insurance, your policy should decrease in line with your mortgage. So, you should stop paying for insurance once your mortgage is fully paid off.

If you have level-term insurance, your beneficiaries will receive a payout if a valid claim is made during the policy term, regardless of whether you still have a mortgage or not.

If my smoker status has changed, does this affect my policy?

A change in smoker status might affect your policy, but not always. If you smoked when you originally took out your life cover but have since quit, you may be eligible for a new policy as a non-smoker. This could make your premiums cheaper, as long as you meet certain criteria.

If you’ve taken up smoking since your application, your policy and premiums shouldn’t change. But you may need to tell your insurance provider. Not doing so could invalidate your policy, so check the terms and conditions of your policy to see what you need to do.

Should couples take out joint life insurance?

Whether you take out separate policies or joint cover is up to you. Joint life insurance is often cheaper. But it only pays out once, after the first person dies within the policy term.

Once a claim is made, the policy will end and the surviving partner will no longer be covered. If you need cover for both of you, separate policies might be best.

Am I covered by my employer’s life insurance?

You might be. Some companies offer their employees death in service benefit – a tax-free lump sum that’s paid out if you die while you’re in their employment.

Is life insurance taxable?

There shouldn’t be income tax to pay on a life insurance payout and you won’t pay IPT (insurance premium tax) on your premiums. But it could be subject to inheritance tax if the total value of your estate is above the £325,000 threshold. However, inheritance tax can be avoided by writing your life insurance in trust.  

See more on life insurance and tax.

What does writing a life insurance policy in trust mean?

A life insurance policy in trust is a legal arrangement that keeps a life insurance payout separate from the valuation of your estate after you die. Your estate is your property, money and possessions.

If your life insurance is written in trust, it gets paid directly into the trust and doesn’t form part of your estate. That means it isn’t taken into account when inheritance tax is calculated.

And because it doesn’t go through probate, your beneficiaries should receive the money sooner.

Can I have more than one life insurance policy?

Yes, you can have your own life insurance policy and be covered by your employer’s policy. You can also take out more than one policy if your circumstances change. There’s no legal limit on how many life insurance policies you can take out.

A second policy might make up any shortfall in your cover, such as if you have a second family. You could even choose different types of policy for different financial commitments.

What’s the difference between life insurance and life assurance?

Life assurance is another term for whole of life insurance. It’s an ‘assurance’ that you’ll get a guaranteed payout no matter when you die.

The terms life insurance and life assurance are often used interchangeably, but a standard life insurance policy is only for a set term so won’t payout if you die outside the term.

When’s the best time to get life insurance?

It's common to get a new life insurance policy after a major life event, like moving in with a partner, getting married, divorced or having a baby. However, the younger and healthier you are, the cheaper your premiums are likely to be.

Do I need life insurance to get a mortgage?

It isn’t a legal requirement and, contrary to popular belief, most mortgage providers won’t ask you to take out life protection cover as a condition of their mortgage offer. They may recommend having it though.

What happens to my life insurance if I miss payments?

Some providers will give you a set time to make up a missed payment without your policy being affected. Others will stop cover as soon as you miss a payment. Check your policy details.

If you know you’re going to miss a payment, get in touch with your insurance provider as soon as possible. They may be able to agree a payment holiday to give you some time and space to catch up on your payments.

If you think you might have difficulties paying your premium in the future, you could add a waiver of premium to your policy when you take it out.

What is a waiver of premium for life insurance?

A waiver of premium could cover your monthly repayments if you’re unable to work because of serious injury or critical illness. This can only be added at the start of your life insurance policy, not later.

Let your insurance provider know if you want to add a waiver of premium when you take out a new policy. It might increase the cost of your premium.

Can you claim on your life insurance policy if diagnosed with a terminal illness?

Some insurance providers might pay your claim early to help you and your dependants cope financially if you’re diagnosed with a terminal illness. This is typically if your doctor has given you less than 12 months to live.

Check the policy details before you buy, as the exact terms can vary among providers.

Can I cancel my life insurance policy?

Yes, you typically have a 30-day cooling-off period to cancel a new life insurance policy without charge and get a full refund for any premiums paid.

After that you can cancel at any time, but you won’t get any refund on premiums you’ve already paid and there won’t be a payout if you die.

Rather than cancel, you may want to speak to your insurance provider about changing your life insurance policy to make it work better for you.

What happens if I don't die before my life insurance policy ends?

If you don’t die during the term of your policy, there won’t be any payout and you won’t get any money back for the premiums you’ve paid.

Can I extend my life insurance policy?

Some insurance providers will let you extend your existing policy. But you’ll need to do this before the end of the existing term, so it pays to look ahead and stay on top of your cover.

If you do extend your policy, the cost of your premiums could rise. It might be worth getting a quote for a new life insurance policy or an over 50s plan instead.

Page last reviewed on 12 APRIL 2024
by Helen Phipps