Life insurance is about making sure your family is cared for if you pass away. So finding the right policy is crucial. Think about what you want covered before you dive in, whether that’s just your mortgage or something a bit more. We’ll do the rest to help you find the right policy for you.
|Types of insurance||Pros||Cons||Good for|
Cover for life with a guaranteed pay-out
Usually a more expensive option
Ensuring you always leave something behind
Same pay-out for the whole cover period
Typically costs more than decreasing term life insurance
Covering everything you need to, for a set period
Pay-out decreases overtime
Covering a mortgage
Help with calculating your cover
How much life insurance do I need?
Struggling to settle on the right amount? We can help!
Life insurance calculator
Estimate how much cover you need with our handy calculator
Who can I cover on a family life insurance policy?
Most policies will only let you cover those over age 18. But some offer limited cover for your kids too. If they do, you’re given a set amount you can claim for if, tragically, one of your children dies.
This could be used to cover funeral costs, or simply to make life financially easier at a difficult time. Claiming for a child shouldn't affect the rest of your policy either. So you still have life cover if you do need to make a claim and still get the same payout if you were to die.
While there’s a minimum age you need to be to get a policy, there’s usually no upper age limit. Standard life insurance policies also usually cover you up to any age, although you may get a better deal with a dedicated over-50s policy. Over 50 life insurance policies offer you guaranteed cover up until age 84 and normally cover you beyond that if you answer a few medical questions.
For joint policies, as long as you live at the same address, and are both over 18, you can share cover. You don’t need to be married, or even in a relationship. You could even cover yourself and a child, as long as you’re both over the minimum age.
Can I leave my family life insurance pay-out to my children?
Yes, but there are a few things to consider before you do:
- Children cannot inherit from a will if they’re under 18, so you have to nominate a trustee to look after your payout until your children come of age. Once they do, the money can then be transferred to them.
- If you want your payout to go to your family as a whole, you could nominate your partner as the inheritor. They could use the payout to support themselves and your kids.
- If you’re a single parent or would rather the money went directly to your children, you’d need to make this clear in your will.
Another way to do this is to write your life insurance in trust, and it ensures that your payout goes to exactly who you want it to. If your kids are under 18, you need to nominate a trustee to oversee the money until they come of age.
With a trust, you can specify when your children get the money. If you think 18 is a little young to be getting a large payout, for example, you could ensure that they couldn’t access the money until age 25.
Will my family pay tax on the money they receive?
This depends on whether you write your life insurance into a trust.
If you die during the term of your life insurance, the payout forms part of your estate. Your estate is the sum total of everything you leave behind.
If your estate amounts to less than £325,000, your inheritors pay no tax on it. But if your estate, including your payout, exceeds £325,000, they pay 40% tax on anything above that threshold.
This can be avoided by putting life insurance in trust. Doing this separates your payout from your estate so your beneficiaries get the full amount tax-free. This is even if your estate is over the £325,000 UK inheritance tax threshold.
You’d be wise to do this if your mortgage is more than £325,000. If your payout is over the threshold, the tax you’d have to pay on it may mean it’s no longer enough to cover your mortgage. Putting your policy into a trust is a smart way to ensure it is.
Trusts also usually allow your beneficiaries to get their payout quicker. With a will, your payout may have to go through probate, which can take a long time. With a trust, it normally doesn’t.
Should we think about joint life insurance?
Joint life insurance lets you cover two lives at once, so it’s particularly well suited to families.
With both you and your partner insured, you’d know that your kids would be looked after financially if either of you died.
This isn’t the case with individual life insurance, where only 1 of you is covered. This can cause issues if the uninsured partner passes away. This leaves the surviving partner and any kids they had with only a single income, and no payout to make up that loss.
There are downsides though. Joint policies only pay out once, so if both of you died at the same time, your beneficiaries only get a single payout. If you each had individual life insurance policies, they’d get 2 payouts. This costs more, however, so whether you want to pay that depends on whether you think your family needs that extra level of support.
Buy life insurance and choose a £75 gift card with Confused.com Rewards*
*Get reward after 6 months of your policy being active. Excludes over 50s guaranteed acceptance policies and can’t be used alongside cashback offers. T&Cs apply. **Restrictions apply, see https://www.amazon.co.uk/gc-legal
What are the different types of life insurance?
Joint life insurance
covers two people on a single policy, paying out if either of you die during the policy term
is individual cover that pays out when the policyholder dies.
Over 50s life insurance
offers cover for the over 50s, with acceptance guaranteed up to age 84. No medical or health questionnaires required
Critical illness cover
pays out a lump sum if you're diagnosed with an illness covered by your policy
covers the cost of private medical care, helping you avoid NHS waiting lists to get the cover you need, quickly
Life insurance guides
What is life insurance?
What do you need to know before signing up? Find out here
Different types of life insurance
Confused over which policy type to get? Find the perfect fit here
What is joint life insurance?
Should you get a single or joint policy? We look at the pros and cons
Death in service benefit
Do you need life insurance if you have death in service? We take a deep dive here