^ 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 September 2023.
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What is life insurance?
Life insurance is designed to take care of your family financially when you die. 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 pay-out could:
- Ease the financial burden and upheaval of losing a partner or parent.
- 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.
- Cover your funeral costs.
If you’re also worried about what would happen if you fell seriously ill, you could take out life insurance with added critical illness cover. This could help cover lost earnings if you’re critically injured or ill and unable to work.
Do I need life insurance?
While life insurance isn’t a legal requirement, the right policy can offer the reassurance that your 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, typically in the form of a lump sum. It will pay out to the people you’ve named as beneficiaries if you die during the term of the policy – which can be a set number of years or the whole of your life.
When taking out a life insurance policy, you’ll want to consider the following:
The income your family or dependants will need to cover living costs without your contribution – 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.
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 four short questions away from knowing the minimum amount of cover you’re likely to need to make sure your loved ones are protected.Calculate now
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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
- Fixed premiums.
- You know how much your loved ones will get.
- Can be more expensive.
- Set pay-out ignores effect of inflation in real terms.
Decreasing term life insurance
- Can be cheaper than level term insurance.
- Works well to protect a repayment mortgage.
- Size of pay-out decreases over time.
- Often only covers a mortgage.
Other types of cover
Offers protection against inflation. Your premiums will increase to reflect the additional level of cover.
Best for: taking account of increasing prices, pay rises or growing financial commitments during the policy term.
Whole of life insurance
As long as you keep up with the monthly payments, this offers a guaranteed pay-out whenever you die.
Best for: covering inheritance tax payments.
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.
Over-50s life insurance
Doesn’t require you to answer health questions but tends to offer smaller guaranteed pay-outs. 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.
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.
Offers cover if you can no longer work because of an accident or ill health.
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.
|Deaths not covered||Illness/injury not covered|
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.
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 life insurance pay-out 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 pay-out 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 and the following information to give you a personalised quote:
- Information about you – your name, date of birth and contact details.
- Information about your health – your medical history, including any pre-existing medical conditions. Learn more about life insurance and pre-existing medical conditions.
- Your lifestyle – you’ll be asked about your smoking habits or if you use nicotine substitutes.
- 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.
 Correct as of September 2023.
How much is life insurance?
The price of life insurance depends on the level of cover, as well as the age and health of the policyholder. To give you an idea of what you can expect to pay, we’ve calculated the average price for life insurance:
|Average life insurance premiums|
|Amount insured||Monthly premium||Annual premium|
 51% of customers were quoted less than £8.64 per month and £104.00 per year for their life insurance for a 10 year term, up to £175k worth of cover and no critical illness cover. Based on Compare the Market data from September 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?
Amount of cover
The higher the amount of pay-out you might need, the more you’re likely to pay.
The longer your policy lasts, the more you’ll pay in total – but you’ll be protected for longer.
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).
To assess the risk involved in offering you a policy.
You’ll be asked about your smoking habits or if you use nicotine substitutes.
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:
- Four steps to making a life insurance claim – helps make the claim process easier and answers questions you might have about life insurance beneficiaries and pay-outs.
- Guide to holding multiple life insurance policies – we look at whether it’s better to have more than one life insurance policy.
- What age should I take out life insurance? – no matter what your age, our guide helps you choose the right life insurance policy.
- Life insurance and inheritance tax – all you need to know about paying tax on life insurance.
- How does lifestyle affect life insurance premiums? – find out how a healthier lifestyle could mean a more affordable premium.
AMAZON.CO.UK GIFT CARD**
Buy your life insurance online through Compare the Market and claim an Amazon.co.uk gift card from £25 to £195**.
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 July 2022.
- You’ll be contacted to claim your Amazon.co.uk gift card up to 45 days after paying your third monthly premium.
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 the cheapest life insurance?
While the price of your life insurance premium is a main 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.
Compare life insurance quotes in less than 4 minutes.
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 pay-outs will only be given to beneficiaries named on the policy.
How long will it take to get a pay-out on a claim?
The length of time it takes to receive a life insurance pay-out 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 pay-out if a valid claim was made during the policy term, regardless of whether you still had 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 pay-out 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 pay-out 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. This 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.
This can make up any shortfall in your cover, such as if you have a second family. You can even choose different types of policy for different financial commitments, like a mortgage.
What’s the difference between life insurance and over 50s life insurance?
The main differences between over 50s cover and standard life cover are:
- No medical exam – acceptance is guaranteed for over 50s life insurance, regardless of your health or lifestyle.
- A guaranteed lump sum pay-out – unlike standard term life insurance, which is for a fixed period, over-50s life insurance will cover you for the rest of your life, as long as you keep up with your payments.
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 pay-out 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 pay out if you die outside the term.
When’s the best time to get life insurance?
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.
Who is the best life insurance provider?
The best life insurance provider for you will depend on your individual needs – there’s no one size fits all. You’ll need to find a policy that covers what you want it to, from a provider you can trust at a price you can afford.
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.
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 30 days to cancel a new policy without charge – after that you may have to pay a cancellation fee. However, if you cancel, there won’t be a pay-out if you die, and it’s unlikely you’ll get a refund on premiums you’ve already paid.
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 pay-out and you won’t get any money back for the premiums you’ve paid.
Can I extend my life insurance policy?
Some insurance providers can extend your existing policy. But you may need to complete a new health assessment, and as you’ll be older, 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.