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How does life insurance work?

Life insurance provides a payout when the policyholder passes away. With a joint life insurance policy, the payout usually goes to the surviving policyholder unless you’ve arranged otherwise. If you and your partner separate, you might be able to split the joint policy into individual ones. For a single life insurance policy, the payout is made to your estate. It’s important to clearly state your wishes when setting up a policy. If you want to specify who receives the lump sum, you could place the policy in trust to name your chosen beneficiary. Alternatively, some policies offer regular payments to your family instead of a lump sum. This is called a family income benefit policy, providing monthly payments over an agreed period.
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1. Amount of cover

Think about the income your family or dependants will need to cover living costs without your support, such as mortgage or rent, bills, debts, childcare, education, and funeral expenses.

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2. Length of policy

Reflect on how long your dependants will require financial support or when you expect to retire, and choose your policy term accordingly.

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3. Joint vs single life policy

Joint policies tend to be cheaper but only pay out once—when the first person dies. Separate policies pay out individually, so after one claim, the other remains active.

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What is life insurance?

Life insurance is designed to provide financial support to your loved ones if you pass away during the policy term. It pays out a lump sum—known as a death benefit—that can help cover everyday living costs, mortgage payments, and outstanding debts.

It acts as a financial safety net, giving your family peace of mind during a difficult time.

The cost of life insurance depends on factors like your age, health, lifestyle, the type of policy you choose, and how long you want the cover to last.

What you should know about life insurance?

Before taking out a life insurance policy, it’s important to understand what is—and isn’t—covered. Here are some key points to keep in mind:
Suicide and self-inflicted injury may not be covered, especially within the first 12 months of the policy. Check your policy’s terms for specific conditions.
Honesty is essential. If you provide false, incomplete, or misleading information when applying, your provider may refuse to pay out.
Disability is not typically covered unless you’ve added specific critical illness or total permanent disability cover to your policy.
Some policies offer early payouts if you’re diagnosed with a terminal illness and are expected to live for less than 12 months.
Missed payments can cancel your cover. If you stop paying your premiums, your policy will usually be cancelled, and no payout will be made.

What are the main types of life insurance cover?

Life insurance comes in different types to suit different needs. The two most common
options are level-term and decreasing-term cover.

1. Level-term life insurance

A level-term policy provides cover for a fixed period with a guaranteed pay-out if you die during the term. Your monthly premiums stay the same, and your loved ones receive a fixed lump sum, agreed when you take out the policy.

Pros:

  • 1. Fixed premiums make it easier to budget

  • 2. You know exactly how much your family will receive if you pass away

Cons:

  • 1. Monthly premiums can be higher than for decreasing-term policies

  • 2. The pay-out doesn’t increase with inflation, so its value may reduce over time

Decreasing-term life insurance

This type of policy also runs for a set period, but the pay-out amount decreases over time—typically in line with your repayment mortgage or other declining debts.

Pros:

  • 1. Often cheaper than level-term cover, with lower monthly premiums

  • 2. Ideal for covering a repayment mortgage or debts that shrink over time

Cons:

  • 1. The pay-out reduces as time goes on, meaning less value if you die later in the term

  • 2. Might not offer much towards other costs like childcare or daily living expenses

Do I need life insurance?

Life insurance isn’t a one-size-fits-all product. Whether you need it depends on your personal situation—particularly if anyone relies on you financially.

Big life events, like buying a home or starting a family, are often key triggers for taking out life cover. The right policy can offer peace of mind, knowing your loved ones would have financial support if the worst were to happen.

You may not need life insurance if:
You’re single with no financial dependants
Your partner earns enough to support the household
Your mortgage is paid off and you’ve built a strong savings buffer
You already have a death in service benefit through your employer that covers essential costs

Even if you don’t need cover right now, your situation could change in the future. Taking out life insurance when you’re younger is usually more affordable—so it’s worth considering sooner rather than later.
Not sure where to start? We’re here to help you understand how life insurance works and when the time might be right for you.
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How much life insurance cover do I need?

The amount of cover you need depends on your personal situation—like your income, dependants, debts, and living costs. Generally, the more cover you choose,
the higher your monthly premium. But underestimating your needs could mean your loved ones are left short.

Get a quick cover estimate

Not sure how much life insurance to take out? Try our simple life cover calculator. Just answer a few questions to estimate the level of protection your family might need.

Prefer to talk it through?

We work with trusted experts at LifeSearch to make life insurance easier to understand. Speak to a real person, free of charge:

Can I have more than one life insurance policy?

Yes, you can take out more than one life insurance policy. There’s no legal limit on the number of policies you hold.

If you already have life cover through your employer, it’s perfectly fine to take out an additional personal policy for extra peace of mind. You can also add another policy if your circumstances change—like starting a second family or taking on a new mortgage.

Having more than one policy can help fill any gaps in your cover and give you flexibility. You might even choose different types of life insurance for different financial needs—like one policy for your mortgage and another for general living expenses.

How much does life insurance cost?

The cost of life insurance depends on your age, health, lifestyle, and the level of cover you choose. Generally, the younger and healthier you are, the less you’ll pay.

To give you an idea, if you’re in good health, you could get life cover starting from as little as £3.50 per month¹ – but the actual price will vary based on your personal circumstances and the type of policy you choose.

Looking to keep costs low? Comparing quotes is one of the easiest ways to find affordable life insurance that suits your needs.

Amount insured Monthly premium Annual premium
£175,000 £10.69 £129

In March 2025, 51% of our customers were quoted less than £10.69 a month (or £128.28 a year) for life insurance with up to £175,000 of cover over a 10-year term—with no critical illness cover included. These quotes were based on customers in good health. If you have a medical condition, the final price you’re offered may be higher, depending on your circumstances.

What affects the cost of life insurance?

Several factors influence how much you’ll pay for
life insurance, including:

1. Policy type

The kind of policy you choose makes a difference. For example, decreasing-term policies usually cost less than level-term policies, but it’s important to pick the one that fits your needs best.

2. Amount of cover

The higher the payout you want, the more your premium will be.

3. Policy length

Longer policies typically cost more overall but give you protection for a greater number of years.

4. Age

Insurance tends to get more expensive as you get older, since health risks increase with age.

5. Height and weight

Your Body Mass Index (BMI) is considered because a higher BMI is linked to increased risks of health conditions like type 2 diabetes and heart disease.

6. Medical history

Your family’s medical background matters. Providers want to know if serious health conditions run in your family that might affect your own risk.

7. Lifestyle

Smoking habits, nicotine replacement use, and alcohol consumption all influence your premium. Some insurers also look at any high-risk hobbies you have.

8. Mental health

A history of mental illness, including conditions like depression or anxiety, can affect your life insurance cost. Learn more about how mental health impacts your cover.

Expert Tips and Guides

Life insurance can feel complicated, but understanding your options is key. We’re here to make it simple. Take a look at some of our helpful guides:
Four steps to making a life insurance claim Simplifies the claims process and answers common questions about beneficiaries and pay-outs.
Guide to holding multiple life insurance policies Explores whether having more than one policy could work better for you.
What age should I take out life insurance? No matter your age, this guide helps you find the right policy to suit your needs.
Life insurance and inheritance tax Everything you need to know about tax on life insurance pay-outs.
How does lifestyle affect life insurance premiums? Discover how living healthier could lower your premium.

How can I get cheap life insurance?

Everyone wants great value – but the cheapest life insurance isn’t always the right fit.
Here’s how to lower your costs without compromising on cover:

1. Take out cover early

The younger and healthier you are, the lower your risk – and the cheaper your premiums are likely to be. Starting early could save you money long term.

2. Live a healthy lifestyle

Staying active, eating well and avoiding smoking can help lower your premiums by reducing your perceived health risks.

3. Combine cover types

Adding critical illness cover to your life insurance is often more cost-effective than buying two separate policies.

Why Use Us

4. Pick the right type of policy

Term life insurance – which lasts for a set number of years – can be more affordable while still offering high cover when you need it most.

5. Review your policy regularly

Life changes – like marriage, children or divorce – could mean your cover needs adjusting. A quick review can ensure you're not paying for more than you need.

6. Compare quotes

Shop around to compare not just prices, but cover levels and exclusions too – to make sure you’re getting the right protection at the right price.

Frequently Asked Questions – Life Insurance

Life insurance can feel complex, especially when you’re trying to make the right decision for your future and your family. That’s why we’ve answered some of the most common questions to help bring clarity and confidence to your choices.
How long should I get life insurance for?

That depends on your personal circumstances. Think about how long your family would need financial support—often until children are financially independent or your mortgage is paid off.

Your insurer will usually need a completed claim form and a copy of the death certificate. The process is typically straightforward, but it’s always best to check what documents your specific provider requires.

It can vary, but most life insurance providers aim to pay claims within a few weeks once all documents have been received and verified.

Yes—if your policy is still within its term, you’re still covered even after your mortgage is paid off. You may even want to review your cover and adjust it based on your new financial situation.

It could. Some providers may allow you to request a review after 12 months of being smoke-free, which might reduce your premium. You’ll need to inform your insurer directly.

Possibly. Many workplaces offer ‘death in service’ benefits, but the cover amount may be limited. It’s worth checking, and considering a personal policy for more comprehensive protection.

Placing your policy in trust lets you specify who should receive the payout, and can help the money reach your beneficiaries faster. It may also help avoid inheritance tax.

Yes, you can. There’s no limit to how many policies you can hold. This can be helpful if your circumstances change and you need extra cover—for example, after buying a new home or having more children.

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