When it comes to finding a life insurance policy for you, you’ll likely question, “what is the best life insurance policy?”
Life insurance policies however, will vary by individual needs and requirements, it isn’t a one-size-fits-all insurance.
There are two main types of life insurance available in the UK, Term Life Insurance and Whole of Life Insurance. We’ll explore these options and exactly what they include, helping you to get a better idea of which option may best suit your individual circumstances.
In simple terms, life insurance will provide a predetermined lump sum or ongoing payments to the chosen beneficiary in the event of the death of the policyholder.
The amount received will depend on the level of cover and is reliant on the premium being continuously paid for as long as required.
Life insurance can be used for a range of different things, most commonly it’s used for:
Life insurance can be beneficial for anyone and everyone, however, you may find life insurance particularly useful if you are a homeowner with a mortgage, have a family or financial dependents or if you are a business owner.
As of 2025, only 35% to 38% of people in the UK have life insurance cover.
There are two main types of life insurance in the UK, term life insurance and whole of life insurance, we’ll explore them in detail, whilst highlighting the differences.
Term life insurance is taken out for an agreed term, for example, over 10, 20, or 30 years. You’ll decide the agreed term based on the period of time it’s needed for.
It could be over the term of raising children, or paying off a mortgage. However, the policy only pays out if you are to pass away during the agreed term.
It’s typically the most popular choice when choosing life insurance, mainly because it’s the most affordable option. It can also be preferrable as it offers temporary cover with less of an ongoing commitment to paying premiums and it can be tailored to suit you.
When choosing term life insurance you then have the option between level term insurance or decreasing term insurance.
When it comes to level term life insurance, your premiums and lump sum payout (if you die during the policy) remain exactly the same throughout the policy.
This option is most ideal for:
With decreasing term life insurance, your payout reduces over time. For example, if you wanted cover to pay a mortgage, your premium and level of cover will decrease as the mortgage debt decreases.
This can typically make decreasing term life insurance a cheaper option as the amount of pay out will reduce as debts reduce.
Therefore, if you want your payout to stay the same throughout the term, level term is the most suitable option, if you want to cover a debt or payment that decreases, decreasing term may be more suitable.
The other most common type of UK life insurance is whole of life insurance. It’s designed to cover you for your whole life and does not expire, as long as you continue to pay your premiums.
With whole of life insurance, you are guaranteed a payout. This type of life insurance is most commonly used for: funeral costs, inheritance planning, or to leave your family financially stable.
The benefits of whole of life insurance are that you have peace of mind there will definitely be a payout after you pass away. The disadvantage is that it’s a more expensive option than term cover, where you may not receive a payout.
There is also the option to have a joint life insurance policy. It can be beneficial as it’s a cheaper option than taking out two separate policies and can be easier to manage.
However, this would mean there is only one payout from the policy. Therefore, if one person died during the policy, the remaining member would receive the lump sum, but the other person on the policy would be left without cover. This may be suitable in some circumstances.
Joint life insurance is commonly considered for people who: have a joint mortgage, are working parents or business partners.
We can't say exactly which policy is best for you without learning more about your individual situation but we can look at some typical requirements and relevant suggestions for the best suited policy.
Talking to an expert adviser can be beneficial in helping you to compare policies, understand what cover you need and allow you to ask any questions.
If you have a repayment mortgage, decreasing term cover may be appropriate, as it can provide peace of mind knowing your protected whilst you repay your mortgage and the debt decreases.
If You Want to Protect Your Family's Lifestyle
If you want to protect your family's lifestyle and stability, level term cover can be a suitable option as it would provide a payout if you died during the policy.
If You Want Guaranteed Lifetime Cover
If you want guaranteed lifetime cover, whole of life insurance could be suitable as it provides peace of mind that you’ll have a guaranteed payout for whatever you need to cover when you die.
If You're Buying Cover with a Partner
If you want to purchase a policy with a partner, it can be a good idea to compare joint and single policies to see which would be the best value and most suitable. It can also help you to consider options after one of you dies.
Before choosing a policy, you may want to assess a few considerations.
Budget
It’s important to have a budget in mind to make sure you can afford what cover you need. It can be worth considering your budget before speaking to an adviser as they can help you find the most suitable policy that’s within the budget and ensures your premiums are affordable long term.
Length of Cover
It’s worth considering how long you want to be covered for, and what you want the cover specifically for. This can help to make it easier to determine the length of cover you need. For example, is it just to cover a mortgage? Or are there more financial responsibilities that need covering?
Dependants and Financial Commitments
You’ll want to consider what dependents and financial commitments you have and who or what would need protection if you were to die.
Age and Health
Your age and health can affect policy premiums. These can increase the likelihood of payouts and some policies may have age cut off limits. It may be worth considering life insurance when you are younger to get more affordable premiums.
There are two additional layers of protection you can add to your policy.
Critical Illness Cover
Critical illness cover is a long-term insurance policy, where you’d pay a regular monthly premium to cover a serious illness. The exact serious illnesses covered are listed in the policy, but commonly include cancer, a stroke or heart attack or major organ transplants.
You’d receive a one-off, tax free payment if you were to be diagnosed with one of the illnesses included.
Often, critical illness cover is used to protect things like mortgages, to ensure you can keep paying necessary bills or for any care you may need.
Critical Illness Cover offers a safety net for anyone who doesn’t have sufficient savings or employee benefits in place to meet all essential outgoings. Find out more about critical illness cover.
Income Protection
Income protection insurance is designed to offer peace of mind and security against a loss of income. If you’re unable to work because of an illness, the policy would pay out a portion of your monthly earnings (up to 70% of your gross annual salary).
Income protection can be helpful in providing peace of mind against lost income and can be particularly beneficial for self-employed individuals.
If you have monthly outgoings and don’t have indefinite sick pay from your employer, income protection is worth considering. Find out more about income protection.
We would always recommend getting advice before you choose life insurance. This means you have the opportunity to get support and don't have to spend hours comparing policies yourself. It also allows you to be confident in your policy and know exactly what you're covered for.
Using a life insurance intermediary means you can have expert advice and ask any questions you need, they can help you find a policy based on your budget and needs. It also is no obligation and free, meaning you can get advice then decide to make your own decision, and take as much time as you need to make sure you get it right for you.
Life insurance is definitely worth it, if you want peace of mind that your financial responsibility and dependants will be covered. It depends on what is important to you as to what cover you need.
Life insurance isn't a legal requirement for a mortgage, but some lenders do make it a condition of the loan, especially for riskier borrowers or large amounts, to ensure the mortgage gets repaid if you die, protecting their investment and your family's financial stability. Learn more about life insurance and mortgages here.
Yes, you can have more than one life insurance policy, multiple policies can often be used to cover different financial needs, you may want one for covering your mortgage and one for protecting your family.
Although it’s never nice to think about, life insurance can be essential in preparing for the future and protecting those we care about. It's always worth considering what options are available to you.
Our expert advisers are available to offer a free, no-obligation life insurance quote and recommendations on 01285 864670.