Do I need life insurance?

There’s no law that says you need life insurance, but it could make a huge difference to your nearest and dearest at a difficult time.

Find out who needs life insurance, when you might want to get it and what it has to offer.

There’s no law that says you need life insurance, but it could make a huge difference to your nearest and dearest at a difficult time.

Find out who needs life insurance, when you might want to get it and what it has to offer.

Written by

Faith Archer

Insurance expert

Last Updated

24 JANUARY 2024

6 min read

Who needs life insurance?

Life insurance could give your loved ones financial support after you die, helping to keep food on the table and a roof over their heads. So, if you have people who depend on you financially – a partner, children or an elderly relative, for example – it’s important to consider.

It’s also something to think about even if you’re not the main breadwinner in the family, for example, if the loss of your contribution to looking after the home and children would have a financial impact.

How does life insurance work?

If you die while the policy is running, life insurance could give your beneficiaries – the people (or person) you’ve chosen to receive the proceeds of your policy – a lump sum. They could use this to pay bills and meet other financial commitments or to pay off debt like a mortgage. Life insurance could lift the financial burden, giving your family the chance to deal with your loss.

Is it ever compulsory to take out life cover?

Life insurance isn’t usually compulsory, but if you’re taking out a mortgage, your provider might insist that you have it to cover your remaining payments if you die while the mortgage is still running.

Mortgage life insurance is often sold as a decreasing term policy. Under this type of policy, the amount your beneficiaries would receive if you die reduces in line with your total mortgage debt. Another type of mortgage life insurance is level term insurance, where the amount your loved ones would get stays fixed throughout the life of the policy, but the premiums tend to be pricier.

When should I get life insurance?

People often choose to take out life insurance prompted by a big life event or financial commitment – such as getting married, buying a first home or having a child. See more on when to get life insurance. But even if there are no big changes ahead, it’s worth reviewing your situation to see if you need life insurance. If your family and income grow, you may face larger costs and therefore need extra cover.

Do I need life insurance if I'm single?

It's easy to assume that, if you're single with no children, you won’t need life insurance because no one’s relying on your income. But there are circumstances when you might want to consider cover.
These include:

To cover the cost of funerals - the average cost of a funeral is now £8,864, according to the SunLife Cost of Dying Report 2022. Having insurance in place could mean your family gets a payout to help towards the cost of your service if the worst happens. Learn more in our guide to funeral cover.
To cover your share of a mortgage – if, for example, you bought a home with a friend or family member.

Who doesn’t need life insurance?

Arranging life insurance can often be very sensible, but it’s not necessary for everyone.

Here are a couple of examples of people who may not need life insurance:

You’re too young – while it might seem obvious, children don’t need to take out life insurance. Similarly, students may not need life cover, if they don’t have anyone depending on them financially. However, there may be advantages to getting life insurance while you’re relatively young and healthy, as the premiums are likely to be cheaper.
You’re single with no shared debts – if you’re living alone, with no dependants, and enough savings to cover your funeral, you may have no need for life cover.

Do I need life insurance if I have death in service cover?

Death in service is a benefit you might have as part of your job. It typically pays out a tax-free lump sum to a beneficiary if you die while still employed by the company. It usually tots up to between two and four times your annual salary.

If you need more protection, it may be possible to increase your death in service payout by agreeing to a cut in salary. But don’t forget, if you stop working for that company you won’t be covered any more. The big advantage of taking out your own separate life policy is that it would keep running whoever you work for (as long as you’re able to keep up with your payments).

What are the types of cover to compare?

There are a few different types of life insurance to think about.

A level term policy pays out a set amount, either as a lump sum or a regular income, if you die during the fixed time while the policy is running.
Decreasing term insurance can also pay out if you die within a set period, but the pay out goes down during that period. It is often used to pay off a mortgage where the amount owed also decreases over time.
Whole of life insurance provides a guaranteed payout, whenever you die, provided you’ve kept up with your payments.
Over 50s life insurance is available to people aged between 50 and 80. It can pay out a limited lump sum to cover funeral costs or bills, or to leave to your loved ones. Over 50s life insurance offers guaranteed acceptance – so you won’t have to answer any questions about your health.

Ultimately, the life cover that works for you will depend on your individual needs and what you can afford.

Top tip

Think about who would suffer financially if you died. If you’re footloose and fancy-free, you might not need to fork out for life cover. But if you’d leave loved ones in the lurch because they couldn’t pay the bills and keep a roof over their heads, then life insurance could be well worth the money.

Are there other types of insurance I might need?

As well as life insurance, there are other types of policies that could help you financially if you’re unable to work. You’ll need to weigh up the combination that makes sense for your wallet and your own situation:

Income protection insurance – could provide a tax-free income to cover your outgoings if you’re unable to work because of illness or injury.
Critical illness cover – offers financial protection if you suffer from a serious illness or injury listed on your policy.
Mortgage protection insurance – a form of income protection insurance, specifically designed to cover your mortgage repayments if you lose your job or become ill and unable to work.

What factors affect the cost of life insurance?

Factors affecting the cost of a policy include:

The amount of money you’d like your loved ones to receive – generally speaking, the more cover you have, the more money your beneficiaries will get – but your premiums will also be more expensive.
Your age – as you get older, you can expect to pay more for life cover.
Your health – if your family has a history of serious illnesses, then you can expect your policy to cost more. The same goes if you have any pre-existing medical conditions when you apply for life insurance.
Your lifestyle – if you smoke and/or drink, life insurance is likely to cost more.