Life insurance

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[1] 51% of our under 30-year-old, non-smoker customers were quoted less than £4.96 per month/year for their 10-year decreasing term life insurance policy, up to £175k worth of cover, no critical illness cover in November 2022.

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

[2] Correct as of December 2022.

What is life insurance and do I need it?

Life insurance is a type of insurance policy that can provide financial support to your loved ones when you die.

There are many benefits to life protection insurance. A pay-out can help clear outstanding debts and your mortgage, and give your family money to live on so they can continue to pay bills and living expenses if you die. 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.

While life insurance isn’t a legal requirement, the right policy can offer the peace of mind that your family has a financial safety net during the worst of times.

It’s also worth noting that some mortgage lenders might insist you have life insurance as a condition of their mortgage offer. This will ensure your mortgage is paid off if you die.

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:

Cover amount

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.

Did you know? According to the Association of British Insurers (ABI), 98% of all life insurance claims were paid in 2021, totalling a record £6.8 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

What are the benefits of life insurance?

Life insurance offers you peace of mind that your loved ones will be looked after if you die. 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.
  • Life insurance with added critical illness cover could help cover lost earnings if you’re critically injured or ill and unable to work.

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

Advantages

  • Fixed premiums. 
  • You know how much your loved ones will get.   

Disadvantages

  • Can be more expensive. 
  • Set pay-out ignores effect of inflation in real terms. 

Learn more about level-term life insurance

Decreasing term life insurance

Advantages

  • Can be cheaper than level term insurance.
  • Works well to protect a repayment mortgage.  

Disadvantages

  • Size of pay-out decreases over time.
  • Often only covers mortgage.

Learn more about decreasing term life insurance

Other types of cover

Increasing 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 monthly payments, this offers a guaranteed pay-out whenever you die.

Best for: covering inheritance tax payments.

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. 

Learn more about joint life insurance

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, outstanding bills, or to leave a small gift. 

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.

Learn more about critical illness cover

Income protection

Offers cover if you can no longer work because of an accident or ill health.

Learn more about income protection insurance

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 circumstances will change. If a non-working partner dies, you might face additional childcare cost 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 towards a tailored quote that meets your needs. You’re just four short questions away from knowing the minimum amount of cover you’ll need to make sure your loved ones are protected.

Calculate now

Prefer to talk to someone?

The Comparethemarket 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:

0800 072 1147

Lines are open:
Monday to Friday: 8am-8pm
Saturday: 9am-2pm
Sunday: 10am-3.30pm

What does life insurance cover?

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

Covered Possibly covered
  • Most common causes of death
  • Cancer
  • Heart attack
  • Accidental death
  • Unexpected illness
  • Suicide (if you’ve had the policy for at least 12 months from the start date or the date you increase your cover) or self-inflicted injury
Deaths not covered Illness/injury not covered
  • Pre-agreed conditions
  • Drug and alcohol abuse
  • High-risk activities – like dangerous sports
  • Committing a criminal offence or provoking an assault
  • Death if information given when applying for the policy was untruthful or inaccurate
  • Total disability in your lifetime unless added

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 does life insurance cost?

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[3]
Amount insured Monthly premium Annual premium
£100,000 £14.60 £176
£175,000 £16.52 £199

[3] 51% of customers could achieve a premium of £14.60/£16.52 per month for their life insurance for a 10 year term, up to £100k/£175k worth of cover and no critical illness cover. Based on Comparethemarket data from November, 2022. 

The prices on our site are for ‘healthy’ customers. 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.

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).

Medical history

To assess the risk involved in offering you a policy.

Lifestyle

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 below:

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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 December, 2022.

AMAZON.CO.UK GIFT CARD**

Buy your life insurance online through Comparethemarket 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. You’ll then be contacted within 45 days with instructions on how to claim.

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.
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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 couldn’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 will 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[4].

Frequently asked questions

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, so 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, to resolve any shortfall in your cover – for example, if you have a second family. You can even choose different types of policies 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.

Find out more about life insurance vs life assurance

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, but most mortgage providers will ask you to take out life protection cover as a condition of their mortgage offer. But you don’t have to take out life insurance with your mortgage lender. You can buy it elsewhere.

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 your life insurance if you 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 it when you take out a new policy, although 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 (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.

Page last reviewed on 17/01/2023
by Helen Phipps