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***Confused.com data July - September 2023. Prices based on the cheapest quote offered on a 25 year policy with £100,000 of cover.

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What is life insurance?

Life insurance gives your family or loved ones a payout if you die during the time you’re covered.

If you die while the policy is active, it pays out a tax-free cash lump sum to your beneficiaries. The people you choose to get the life insurance payout can use it however they like.

Most people use it to:

  • Pay off a mortgage
  • Cover funeral costs
  • Leave something behind for their family
  • Clear any debts they might have

Unlike many other kinds of insurance that last for 12 months, life insurance policies are designed to last decades.

Normal life insurance runs until you hit a certain age - for example, 65 years. If you die during before this age, your beneficiaries get a payout. If you survive past that specific age, your policy ends. You then either have to find a new policy or live without cover.

Most life insurance policies run for 5 to 40 years, but a whole life insurance policy – also known as life assurance – has no set cover term. You sign up, and as long as you keep making the monthly payments, your beneficiaries get a payout, no matter when you die.

The obvious benefit here is that, as long as you don’t die in a way that isn’t covered by your policy, a payout is usually guaranteed. But a guaranteed payout tends to come at a higher cost. So your monthly payments might be more than they would for standard life insurance.

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How does life insurance work?

Here's how it works:

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You buy your life insurance policy to cover yourself for a set amount and for a set period of time.

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You make monthly payments for the duration of the policy to keep it active.

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If you die during the policy term, your named beneficiaries get a payout equal to your cover amount.

What our life insurance expert says

"Life insurance can be a great safety net for your loved ones after you die – but it’s important to get it right. Take some time to work out how much money you think your family would need after you’re gone, taking into account any mortgage, debts, and living expenses. 

And when you have life insurance, don’t forget to review it regularly to make sure your level of cover is still enough. Ideally you should review it at least once a year or after any big life events such as buying a house or having a child."

Matthew Harwood, Home & lifestyle insurance expert at Confused.com
Home & lifestyle insurance expert Confused.com logo

Do I need life insurance?

It's not a legal requirement to get life insurance. But if you’re the household’s main earner, it’s worth thinking about whether your family would be financially secure if you died. A life insurance payout could help keep your loved ones financially stable and cover any outstanding debts you might leave behind.

There are also some key life moments when it might be worth considering life insurance:

  • Getting married means you have a joint financial commitment with your partner. A life insurance policy could help maintain their lifestyle after you're gone.
  • Having a child and starting a family means you have dependents who might need financial stability after you're gone. Life insurance helps take care of this so they're not left with your debt.
  • Buying your first home likely gives you your single biggest outstanding debt – your mortgage. If you’re fully or partly responsible for a mortgage, having a life insurance policy can help cover what you owe. But, there’s no legal obligation to get a life insurance policy when you get a mortgage.
  • Changing jobs often comes with a change in salary and a change in lifestyle. If you were to die, a life insurance policy could be useful to maintain your family's standard of living.

Depending on your circumstances, you might choose joint life insurance. This insures 2 people on one policy. If either person dies, the other person gets the payout and the policy ends. But if both people die at the same time, their beneficiaries only get a single payout. If you both need cover, separate policies may work better.

If you have a life insurance policy through your employer, it’s worth checking the small print to see exactly what you’re covered for, and how much. Many employers offer a death in service benefit. This usually provides a lump sum of around 4 times your annual salary if you die while employed by the company. You lose this benefit if you stop working for that employer, whereas a personal life insurance policy stays with you.

Single people might also benefit from life insurance. The sale of your house normally covers your remaining mortgage in the event of your death. But a single person’s life insurance payout could ensure you leave something behind for your family or friends or to cover funeral costs.

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What are the main types of life insurance cover?

The main types of life insurance are:

  • Level term or standard life insurance: These policies pay a set amount if you die during the policy term – or, if it’s a joint policy, the first death of either of the people insured. It pays out the same amount if you die in week one or week 1,000.
  • Decreasing term life insurance: The payout changes over the course of the policy – the further you get into the policy, the more it decreases. A decreasing term policy is normally used to cover your mortgage, which should also decrease over time.

Some insurers also offer a type of policy that pays out a set amount monthly if you die. This type of policy is called family income benefit.

When you’ve chosen the type of life insurance you want, you should also have the option of adding on critical illness insurance. This pays out if you’re diagnosed with a serious illness or are severely injured, letting you focus on getting better without worrying about how you’ll pay the bills.

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How much life insurance cover do I need and for how long?

The level of cover you need depends on what you want your payout to do. Here are some things to consider when working out how much life insurance cover you might need, and for how long:

  • If you want it to support your loved ones after you die, think about how long they’re likely to be financially dependent on you. This could be 25 years or it might be 5. Then consider how much money they’d need to keep living comfortably without you. Think about day-to-day living costs, rent or mortgage payments, and any other financial commitments they might struggle to meet.
  • If you have any ongoing debts, it’s worth factoring in if you want these covered after you're gone.
  • If you have a mortgage, you might want your payout to cover it fully. If so, think about how much you've got left to pay and factor this into your cover amount. If you have 20 years left on your mortgage, getting cover for at least 20 years makes the most sense.

Most policies have a minimum length you need to hit, too. This differs between policies but it's likely to be between one 1 and 5 five years.

Legally, you can have as many life insurance policies as you like. Some people take out a decreasing term life insurance policy to cover their mortgage, and a separate standard policy to act as inheritance for their loved ones when they die.

But having more than 1 policy isn’t always the best option. Having 2 policies means 2 payments, double the admin, and making 2 sets of arrangements. Instead of taking out an additional policy, try speaking to your insurer about tweaking your current policy.

Try our life insurance calculator to estimate how much cover you need

What life insurance covers

What's included in your life insurance policy depends on your personal circumstances and the insurer you chooose.


What's covered:

  • Death as a result of illness or injury
  • Terminal illness such as cancer. Some policies pay out for this before you die, depending on your policy. This might help support your family while you’re ill, or generally make the rest of your life that little bit easier
  • Pre-existing medical conditions including diabetes, asthma and high blood pressure

What's typically not covered:

  • Drug or alcohol misuse are almost never covered, but it's worth checking your policy details.
  • Gross negligence or a reckless activity
  • Extreme hobbies such as caving or potholing 
  • War and terrorism
  • Suicide or death due to self-inflicted injury within a certain period of starting the policy

Exclusions relating to your life insurance policy should be outlined in your policy terms and conditions. For more information, read our guide on life insurance exclusions.

How much does life insurance cost? 

Life insurance can start from as little as £5 per month***. Bear in mind that this is the minimum you might expect to pay, as premiums are based on a range of factors. 

Several factors affect how much life insurance costs, including:

  • Age: The older you are, the more you’re likely to pay per month. This is because you’re more likely to die during the policy term if you start the policy at an older age.
  • Lifestyle choices: Drinking, smoking (including vaping and using nicotine replacements) and other risky behaviours can all increase the price you pay. Read our guide on life insurance for smokers for more information.
  • Weight: If you’re obese, your likelihood of developing an obesity-related illness increases, and so does your monthly cost.
  • Medical history and pre-existing conditions: Things like asthma or a family history of certain diseases could also see you paying more.
  • Amount of cover you want: Typically, if you’re looking for a higher payout, your costs are also likely to be higher.
  • Policy length can also affect your life insurance policy price. This is because the longer you want the term to be, the more likely you are to make a claim.
  • Salary: The more you earn, the higher your expenses are likely to be. So you need more cover to maintain your family’s standard of living after you die, which means a higher price.
  • Occupation: If you have a high-risk job like a firefighter or an oil rig worker, your costs are likely to be higher than those with low-risk jobs, such as an office worker.

Our guide explains in more detail how life insurance premiums are calculated and what that means for you.

***Confused.com data July - September 2023. Prices based on the cheapest quote offered on a 25 year policy with £100,000 of cover.

What do I need to get a life insurance quote?

You can compare life insurance quote with us in minutes – we just need a few details from you, including:

  • What you’d like to cover: Your mortgage, living costs or both
  • How much life insurance cover you want
  • How long you want the cover to last
  • If you want cover for just you, or you and someone else
  • Some personal details like your name, age, height and weight
  • Some lifestyle information, like if you smoke and drink alcohol
  • A brief outline of your and your family’s medical history. Take a look at our guide to see how your family medical history affects your life insurance costs.
  • Details of any pre-existing medical conditions

We’ll then compare life insurance quotes from our trusted providers to find you our best deals.

Further down the line, you might be asked to have a medical. This is so insurers can see how healthy you are before offering you cover. Not all policies need this, but it’s worth keeping in mind.

Whether you’re asked to have one is often tied to your lifestyle habits. If you’re a young, fit, non-smoker with no pre-existing conditions, you’re less likely to be asked to have one than someone older with a complicated medical history.

If you’re concerned about having to have a medical to get life insurance, it’s often best to contact the insurer directly to see if you’ll be asked to have one.

How to get cheaper life insurance

Making monthly payments across a couple of decades can be a big financial commitment. So if you're looking to lower the cost of your life insurance policy, here are some tips.

  • Shop around for the best deals and find a policy that suits your needs and your wallet. Be sure to compare the policy details as well as the price, to make sure you're getting the best deal for you.
  • Consider a decreasing term policy so the amount you're covered for decreases in line with your outstanding mortgage. As the final payout decreases over time, your monthly payments should be lower than with a level term policy.
  • Start your policy while you're young and you could save quite a bit. As you get older, your risk of dying within the policy term increases. This increased risk translates into higher monthly payments.
  • Maintain a healthy lifestyle to reduce your risk of developing a serious illness. Those with less risky lifestyles, such as non-smokers and those who are physically fit, should see lower costs.


Why choose Confused.com?

  • We're FCA regulated. This means that we follow their strict operational guidelines to do things right for you. So when you use our site, you know you’re in safe hands.
  • We have a robust security and privacy notice in place and promise to look after your personal details with the utmost care.
  • We’re 100% independent and not owned by an insurance company. We’ll always show you our best prices that are available at the time, no matter who they’re from.
  • Our experts and consumer champions are dedicated to helping our customers find the best deal for their needs and budget.

What are the different types of life insurance?

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Explore more life insurance guides

Frequently asked questions

Is life insurance taxable?

Yes, life insurance is taxable if your estate is valued over a certain amount. Your estate is the total value of everything you pass on when you die, and your life insurance contributes to this.

Generally, your beneficiaries don't pay inheritance tax if:

  • If you leave your estate to your spouse, civil partner or a charity
  • If your estate amounts to less than £325,000, even after your payout

Even if your payout takes you over the £325,000 limit, you could still avoid paying tax on it by writing your life insurance in trust. Putting your life insurance policy in trust separates it from your estate, which means it doesn’t get hit with inheritance tax. Read more on inheritance tax and rules on GOV.co.uk.

That way, your payout isn’t subject to the usual legal proceedings after you die, meaning your loved ones could get the money quicker. You can also explicitly name the beneficiaries of your trust, meaning that your payout goes to exactly who you want it to, when you want it to.

Can I get life insurance with a pre-existing condition?

Yes, in most cases, you can get life insurance if you have pre-existing medical conditions. Illness that could be classed as pre-existing conditions include:

  • Diabetes
  • Asthma
  • High blood pressure

If you have any of these, you should still be able to get cover. You might just have to pay more for the policy.

Life insurance providers calculate your risk of dying during the policy term, and you’re offered cover based on those calculations. Since pre-existing conditions increase your risk of death before your policy ends, your costs are likely to be higher than those with no medical conditions.

There are also a few pre-existing conditions that might not be covered. Terminal illnesses usually aren't, and other high-risk illnesses could make it tricky to find cover.

What’s defined as a ‘high-risk illness’ differs between providers. So, it’s worth getting a quote to see whether your pre-existing condition can actually be covered.

Can I cancel life insurance?

Yes, you can cancel your life insurance if it’s not working for you. But think carefully before doing so. If you decide to take out life insurance again at a later date, you might have to pay more each month for the same level of cover you enjoy now.

Another option is to contact your insurer. If you’re cancelling due to your premiums being too high, they might be able to amend your policy to better suit your needs. This way, you keep your cover without having to pay more if you change your mind further down the line.

If you’ve decided it’s really not for you, our guide will tell you how to cancel life insurance.

What happens to my policy if I miss payments?

If you’re struggling to meet your monthly repayments, you should get in touch with your life insurance provider as soon as possible and explain the situation. They might be able to tweak your policy to lower the payments, or work out a payment plan that suits you.

If you miss a payment, you might not necessarily lose your cover, so long as you’re able to cover the amount you missed and keep making regular payments in future.

But if you miss several in a row, your life insurance provider could cancel your policy. This leaves you with no payout and months or even years of wasted premiums.

Some insurance providers have an allowance of how far behind you’re allowed to fall e.g. you have to make your payment within 30 days of the missed payment date. But this varies between providers, so it’s best to get in touch with them before it gets to that stage.

Do I also need income protection?

Whether or not you need income protection is entirely up to you. Income protection insurance is different to life insurance as it’s a policy designed to cover your bills if you’re out of work due to illness, disability or unemployment. Rather than a lump sum, income protection provides you with a regular income, usually a percentage of your salary, until you’re able to return to work.

But it’s worth thinking about whether your finances could take a hit if you were out of work for a year or so, and whether having this regular income would benefit you.

What financial help can I get if my partner dies?

If you have a joint life insurance policy, you should get a lump sum payout if your partner dies. The joint policy then ends.

You could be entitled to other benefits including:

  • Funeral Expenses Payment: This helps people on low incomes afford funeral costs.
  • Bereavement Support Payment: This provides monthly payments if your partner dies. You must claim within three months of your partner’s death to get the full amount, but can claim up to 21 months after their death.

For more information, visit GOV.UK.

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Page last reviewed: 03/10/2023 

Reviewed by: Matthew Harwood

Confused Life is provided by Direct Life & Pension Services Ltd, who are authorised and regulated by the Financial Conduct Authority. Registered office; 2nd Floor Gateway 2, Holgate Park Drive, York, United Kingdom, YO26 4GB. Registered in England and Wales No 2467691. Our service is free and compares a wide range of trusted household names. Confused.com is an intermediary and receives commission from Direct Life & Pension Services Ltd which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don’t promote any one insurance provider over another.