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What is term life insurance?
Term life insurance is designed to pay out a set amount of life insurance if you die during a pre-agreed period of time. The amount you’re covered for and the length (or term) of your policy is set out when you take out the cover.
If you die during the policy term, your beneficiaries should receive the agreed amount, provided you’ve kept paying your premiums.
Typically, the younger you are when you take out a policy the lower your monthly or annual payment will be.
Term life insurance is one of the most commonly bought life insurance policies. Here’s how to find a plan that works for you.
What does ‘term’ mean in life insurance?
The term is the length of time your policy runs for. You’ll agree on this with your insurance provider before you take out the policy. With term cover, your beneficiaries should receive a payout if you die before the policy expires.
However, it’s possible to receive a payout while you’re alive – for example, if you have terminal illness cover. Under this type of policy, you could be paid a lump sum if you’re diagnosed with a condition that means your life expectancy is less than 12 months, for example.
Did you know?The average value of the 48,782 life insurance claims paid out in the UK 2022 was £80,403, according to insurance industry body the ABI. |
What is term life insurance for?
Life insurance can act as a financial safeguard for the people you love, who might struggle financially if something happened to you.
Many people choose to take out a policy to help others cover ongoing costs, like a mortgage. But it could be used to help pay off debts, cover funeral costs or to support your family if you died unexpectedly.
Life insurance could also be useful even if you don’t earn a salary. For example, if you’re a stay-at-home parent, it could help with the burden of childcare costs.
What types of term cover are there?
There are several types of term life insurance, which tend to be based around the type of payout you’ll receive. The premiums you pay will typically reflect this too.
Level term
With level term insurance you get a fixed amount of cover for as long as the policy is in place. This type of policy might typically be used to cover the costs of raising a family until the youngest child turns 18.
It can be more expensive than a decreasing term policy, but depending on when you die, the payout could be larger. However, the set payout doesn’t account for inflation so could stretch less far in real terms if a claim is made.
Decreasing term
With decreasing term insurance, the payout gets smaller over the length of the term. Because of this, it’s typically cheaper than level term life insurance. This type of life insurance is often used to cover a repayment mortgage.
It gives you the reassurance that if you die, your dependants could afford to stay in the family home. The length of decreasing term life insurance is usually the same as your mortgage.
But this kind of policy doesn’t necessarily take account of inflation and the amount your dependants might need to carry on paying household bills.
Increasing term
With increasing term insurance, the size of the payout your beneficiaries will get grows over time. The amount it will increase by is agreed at the start of the policy. It might be in line with an official measure of inflation, such as the Consumer Price Index (CPI) or Retail Price Index (RPI), and in turn your premiums will also increase.
Some providers may specify a maximum figure that your policy can increase by – for example 10%. They may also set out a maximum that your premium could increase by, to match.
Policies may give you the option to accept the increase, rather than it being automatic. If you choose not to accept this, your premiums and payout will remain the same.
Family income benefit
Family income benefit (FIB) is a type of term life insurance policy that can give your family regular financial support if you die or are diagnosed with a terminal illness.
Instead of paying out a lump sum, it pays out a monthly income. This can act as a replacement for a salary.
The payouts your beneficiaries receive will also differ depending on when in the term a claim is made. For example, if you took out a 25-year policy and died after five years, your provider would pay an income for the remaining 20 years. If, on the other hand, you died after 22 years, the payouts would last for only three years. If you don’t die during the term, there’s no payout.
If you can afford it, you could opt for an FIB policy for bills and expenses, alongside a term policy aimed at paying off a mortgage, for example.
What do I need to get a quote?
To get a term life insurance quote, you’ll need to give us a few details, including:
- Date of birth
- Lifestyle habits, including whether you smoke
- How long you want the cover for
- How much cover you want
- The type of policy you want.
The list of quotes we send will also show you optional extras like critical illness cover, so you can choose whether to add them to your policy.
Start a quoteHow much could a policy cost?
Term life insurance doesn’t have to be expensive. On average, On average, 51% of our customers could get a quote from £10.69[1] a month for cover up to £175K.
But there are a number of factors that will affect the overall price of your policy. These include:
- Your medical history
- Your lifestyle, including your weight and whether or not you smoke
- Your job
- Your age
- The sum you want to be insured for
- The policy length.
A lot depends on your personal circumstances and lifestyle. Each insurance provider has a different way of looking at these factors, so you’ll find that quotes vary. That’s why it’s a good idea to shop around and compare term life insurance quotes.
[1] 51% of our customers were quoted less than £10.69 per month for their life insurance for a 10-year term, up to £175k worth of cover and no critical illness cover in March 2025.
Start a life insurance quoteHow can I find the right term cover for me?
Compare with us and we could help you find the right term cover at a price that suits you.
Not sure about the type of cover you want? Give the friendly team at LifeSearch a call. They can offer expert advice and help you figure out what you need.
Give them a call on 0800 072 1147
Why use Compare the Market?
Get a quote in less than 4 minutes[2]
[2] Correct as of June 2025.
What our expert says...
“Like any insurance, it’s crucial that you shop around before taking out life cover. Never assume that your bank or building society will offer you the best deal... Be completely honest in your answers to all the questions on the application, including your medical history, otherwise the policy could be worthless.”
- Tim Knighton, Life, health and income protection insurance expert
Frequently asked questions
Which type of term cover is best for me?
It depends on your circumstances and the type of financial responsibilities you want to cover.
For example, if you don’t have a mortgage, level term cover could be used as a legacy for your family, or to pay for living expenses or outstanding debts.
Before you decide on the best term life insurance for you, work out what you want the payout to be used for and what type of term life insurance will suit those needs best.
How much cover do I need?
It depends on the expenses your beneficiaries would have if you weren’t there. Think of any savings, investments and assets you’ll leave and weigh them up against the ongoing living expenses and additional costs they might face.
If you have a death in service benefit as part of your employment package, you might want to factor this in when deciding how much term cover you want. But remember, if you change employer, you’ll lose this benefit.
Our life insurance calculator is a good starting point to give you an idea of how much cover you might need.
How long should my life insurance cover last?
That’ll depend on what you want the cover for. You could choose life insurance based on how long your children might need financial support if you died. Or you could take out cover that lasts as long as your mortgage.
What happens if I die before my decreasing term policy ends?
If you die within the term of a decreasing term policy, and you’ve kept up your premiums, then your beneficiaries should get a payout.
The size of the payout will depend on how long the policy still has to run. If you died near the beginning of the term, your loved ones would receive more money than if you died nearer to the end of the term.
What happens when the term ends?
Hopefully, when the term of your policy comes to an end, you’re still alive and well. But it does mean that if you die after the policy expires, there won’t be a payout. If you still want life insurance once the term has ended, you’ll need to take out a new policy.
If you have level term cover, you might be able to add an option to renew your cover when the time comes, instead of arranging a new policy. This can only be done at the very beginning of a new policy, not once it’s active.
Be warned though, not all providers offer this option so check before you take out a policy.
Are there policies that last for the whole of my life?
Yes. These are known as life assurance policies, or whole of life policies. Unlike term policies, these don’t expire. They tend to be more expensive than term life insurance.
Will I need to have a medical to take out term life insurance?
It depends. Many people who apply for life insurance cover aren’t asked to undertake a medical, particularly if they’re young and healthy. But you will be asked to answer questions about your health and lifestyle.
You may be more likely to be asked to have a medical if you want a high amount of cover or if you’re older.
Over-50s life insurance is available without a medical, but payouts are generally lower than other types of life insurance.
Can I have more than one life insurance policy?
Yes, there’s no reason you can’t have multiple life insurance policies if you can afford it.
You might want different types of policy to cover different needs or for different time periods. For example, you might have a 25-year decreasing term policy to cover your mortgage, a longer level term policy to cover bills, and a whole of life policy written in trust to leave a legacy or cover inheritance tax.
You might want to take out additional cover if you move to a more expensive property or if your circumstances change, for example remarrying and having a second family.
You might also want another policy that offers add-ons, such as critical illness cover or with a provider who offers value-added benefits, such as access to healthcare advice.
Can I increase the amount of my life insurance policy?
It depends on the policy. Some providers will allow you to increase the size of the payout. Check and ask how much your new premiums would be.
But some providers or policies may not allow this. In such a case, you could take out an additional policy to cover the difference between your existing policy and the amount of cover you’d like. And it may be worth comparing this with a new policy for the whole amount too – to see how the premiums and any benefits stack up.
If you’re not sure what to do, it’s a good idea to speak to an expert who could help explain your options.
Do I have to take out decreasing term insurance to cover a mortgage?
No, it’s entirely up to you. If you want life insurance, you can choose which type of policy best suits your situation and your finances. You might prefer level term insurance to help with bills as your mortgage reduces but your family commitments increase over time.
