In this article we help you to identify the best and most affordable life insurance policy for you, which type of life insurance is best and how to accurately compare the cost and gain peace of mind. We also tell you the best place to compare life insurance quotes* to get the cheapest life insurance premiums from across all reputable life insurance companies in the UK.
Not all life insurance policies are the same as they are designed to provide different kinds of financial support for specific needs. The most common types of life insurance will cover your mortgage, provide family security or simply take care of bills when you die. So it is vital to know the different types of policies as well as understand the differences between each life insurance provider.
1 min summary - Best affordable life insurance in the UK
- Price comparison sites only show generic life insurance prices but these can and often do increase after you complete the application process.
- Insurance companies have different acceptance criteria so some will be fairer to those with health conditions or extra lifestyle risks.
- The easiest way to find the best and cheapest life insurance policy & get up to £100 cashback is to complete this simple form* & get free advice from an independent life insurance expert. Or call 0203 764 0275.
Read the rest of this article to find out:
- Who should get life insurance and is it worth it?
- Which is the best life insurance policy for you?
- How much life insurance do you need?
- How much does life insurance cost?
- How to compare life insurance policies
What is life insurance and how does it work?
What is life insurance?
Life insurance is an insurance contract between one or more people and the insurance company whereby, a sum of money is paid out if the insured person dies. The life insurance payout is usually a tax-free cash lump sum. The life insurance contract can provide insurance for a fixed term of your choosing – this is the most common type of life insurance contract. Or, it can be arranged to cover you until you die therefore the term won't be fixed and the life insurance will continue until your death happens. Life insurance is a way of securing financial support for costs that are likely to occur when someone dies.
Term life insurance usually includes terminal illness benefit which allows the insured person to make an early death claim if they become terminally ill where they are diagnosed with a terminal illness. You can usually claim if your medical consultant can confirm that you are unlikely to live longer than 12 months.
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Our partner LifeSearch will help you get the best and cheapest life insurance.
- Search the market and all the leading insurers
- Free advice with no obligation to purchase
- Up to £100 cashback for new customers
How does life insurance work?
Life insurance pays out in the event of death and the insurance company will collect either monthly or annual premiums to cover the insured person's life. Term life insurance provides cover for a specific number of years that you choose so if you survive, the policy will end and you usually won't receive any money back – much the same way as home insurance or car insurance. The insurance company works out the cost of your life insurance based on your age, health and lifestyle so those with extra risk factors pay more for their cover. Essentially, the life insurance company will use the premiums it collects to create funds to payout when a genuine claim is received.
Some life insurance policies will cost more because they cover you for your whole life so they will always pay out. We explain different types of life insurance and how they work below.
Which is the best life insurance policy for me?
The table below is a guide to the different types of life insurance contracts you will find and we explain how to choose life insurance based on what you need. We also describe the best life insurance policy in certain scenarios and the types of financial commitments that can be covered.
| Type of life insurance policy | Who this type of life insurance is best for |
| Level term insurance | Ideal for those with interest-only mortgages, those where the need for cover remains constant, useful for Inheritance tax (IHT) mitigation or cover for parents who wish to provide money for childcare costs until their children are no longer dependent |
| Decreasing term insurance | Ideal for protecting a repayment mortgage or scenarios where the level of cover decreases over time (i.e IHT on a gift) |
| Increasing term insurance | Providing a lump sum that will keep pace with inflation (if the lump sum is to be used to buy an asset) |
| Convertible term insurance | Those requiring flexibility to convert from a term life insurance to a whole of life insurance in the future. This type of policy is rarely used |
| Renewable term insurance | Where someone has a temporary need (say 10 years) that may extend (i.e. to provide life cover while building assets that will be sufficient to replace it). |
| Whole of life insurance | To clear an IHT bill on an estate or to provide a lump sum on death whenever that occurs. |
| Over 50's life insurance | A policy usually taken out to cover funeral expenses and acceptance is guaranteed meaning it is popular with those with a complex medical history |
| Family income benefit | Ideal for looking after dependents using a regular income in the event of death, otherwise a level term policy would require them to make sure the lump sum payout lasts |
| Critical illness insurance | An expensive policy but worthwhile if you can afford the premiums. It pays out a lump sum if you have a serious illness like cancer or a heart attack even if you make a full recovery |
| Joint life insurance | Usually cheaper for couples (with or without children) and people who have a joint mortgage but sometimes two single policies works out to be more cost-efficient |
How much life insurance do I need?
There is no hard and fast rule about how much life insurance you need but it should be enough to cover:
- your outstanding mortgage and other debts as a minimum
- some of your lost income for your dependents
- the cost of a funeral service
You may want to check out our article ‘What to consider when taking out life insurance' for more guidance on the type and amount of cover you may need. You will also find that our guide, “How much life insurance do you need?” provides a step-by-step method to work out how to get the best life insurance for you.
If you are a business owner you should choose an amount of life insurance that should be enough to purchase any equity the deceased had in the business and the cost of sourcing a replacement employee. You will find more information in our article “What is Shareholder Protection life insurance?“.
What affects the cost of life insurance?
The cost of your life insurance will vary but will be based on:
- the type of life insurance policy you choose
- how much the life insurance pays – this is called the sum assured
- the number of years you are covered for
- your age at the time you start your life insurance contract
- your health at the time you start your life insurance contract
- your lifestyle at the time you start your life insurance contract
- whether you have smoked or used nicotine products in the last 12 months
How much does life insurance cost?
- policies can start as low as £5 per month. We've analysed how much £100,000 of life insurance costs per month to give you an idea
- obviously the shorter the term and the lower the sum assured the lower the monthly premiums will be
- life insurance provides financial security at a time when you need it most. It does so at a cost that is within everybody's reach and so some form of life cover is essential if you have a mortgage, a family or a business.
Monthly price of a level term life insurance over 20 years (non-smoker)
| Age | Life insurance that pays £200,000 lump sum | Life insurance that pays £300,000 lump sum |
| 25 | £5.06 | £6.42 |
| 35 | £8.02 | £12.03 |
| 45 | £18.01 | £25.98 |
| 55 | £45.62 | £68.02 |
*Prices are correct as of March 2024
Monthly price of a level term life insurance over 20 years (smoker)
| Age | Life insurance that pays £200,000 lump sum | Life insurance that pays £300,000 lump sum |
| 25 | £7.12 | £9.65 |
| 35 | £15.49 | £21.56 |
| 45 | £42.85 | £61.23 |
| 55 | £119.21 | £175.23 |
*Prices are correct as of March 2024
Best life insurance companies
There is no one life insurance company that could be referred to as ‘the best life insurance company' as such but some are certainly better than others for each unique set of circumstances.
We have analysed over 500 life insurance quotes comparing prices for both smokers and non-smokers from 10 of the biggest life insurance companies in the UK. We looked at life insurance quotes for 25, 35, 45 and 55-year-olds and analysed the quotes based on five different levels of cover; £100k, £200k, £300k, £400k and £500k.
We ranked each provider based on cost, ranking them from 1 to 10 for each age range and level of cover. We totalled the numbers and came up with our top 10 displayed below. Remember that the top 10 is based on our own research and uses averaging and so you shouldn't use it to inform your buying decision as your circumstances may be different.
Top 10 life insurance companies for smokers
- Guardian 1821
- AIG
- Legal & General
- LV=
- Zurich
- Vitality
- Aviva
- Royal London
- Scottish Widows
- HSBC
Top 10 life insurance companies for non smokers
- AIG
- HSBC
- Legal & General
- Zurich
- Guardian 1821
- Aviva
- LV=
- Royal London
- Scottish Windows
- Vitality
Remember, each insurance company will underwrite your application differently and will set your monthly payments in accordance with their internal risk management rules. Certain medical conditions, occupations or even hobbies will be assessed more harshly by some life insurance companies than others and it is difficult to work out which ones will be best for you. That is why I would always recommend that you speak to an independent insurance specialist, such as LifeSearch*. Simply click on the link and complete the short form and they will call you back at a time of your choosing.
Alternatively, call 0203 764 0275 to have a conversation now. (If you are happy with the policy you are recommended and take out a policy, you'll qualify for up to £100 cashback)
Consumers are misled into thinking that the monthly premium that any price comparison site spits out is what they will end up paying. This is rarely the case as each application is then assessed on its own merits, which is why it is a good idea to speak to the experts who can match you with the insurance company that will view your application most favourably. They will also be able to guide you on the correct amount of cover for your own circumstances and provide advice on how to ensure your family doesn't pay any tax on any of the proceeds. Furthermore, you won't need to look elsewhere for sick pay insurance in the form of income protection insurance as well as critical illness insurance as the advisers can build these into your life insurance solution if you wish.
What types of life insurance policies are available?
- Level term insurance – where the amount of life insurance cover provided remains level throughout the term of the policy, at the end of which the life cover will cease. This type of policy is ideal for paying off an interest-only mortgage in the event of death
- Decreasing term life insurance – also referred to as mortgage protection insurance where the level of life insurance reduces over the term of the policy at the end of which life cover will cease. This type of cover is ideal for covering the outstanding debt on a repayment mortgage
- Increasing term insurance – where the life insurance provided and premiums increase annually over the term of the policy to keep the cover in line with inflation
- Whole of life insurance – sometimes referred to as life assurance, where life insurance is provided for the whole of a person's life so it covers you for the rest of your life and pays out in the event of death whenever that occurs. Often there is an investment element to a whole of life policy
- Over 50's life insurance – a term insurance policy for people aged 50 and over. There is no underwriting, meaning you are guaranteed to be accepted.
- Family income benefit – a term insurance policy where a monthly amount is paid instead of a lump sum in the event of death. As the total payment would be less than with a term insurance policy the premiums will usually be less
- Critical illness insurance – a term insurance policy that will pay out a lump sum if the insured person is diagnosed with a critical illness. The insurance policy will cover a specified list of critical illnesses such as bowel cancer etc
- Serious illness cover – this is like critical illness cover but where the size of the lump sum paid in the event of a claim will vary depending on the severity of the illness. Often serious illness insurance will cover more critical illnesses than ordinary critical illness cover
- Convertible term insurance – a term insurance policy that can be converted to a whole life policy, if required, during the term
- Renewable term insurance – a term insurance policy with an option to renew the policy at the end of the term without the need for a health review
- Joint life insurance – most life insurance policies can be arranged on a joint life basis where a lump sum is payable in the event of the death of one life insured. This type of life insurance is usually (but not always) cheaper than two individual policies as there is only ever one lump sum payable
Who should get life insurance and is it worth it?
Who needs life insurance depends on their individual circumstances. Below I list those people who should consider it and why they would have life insurance:
- People with dependents – life insurance is a vital part of financial planning for anybody with dependants to ensure they are provided for should you die
- People with mortgages or other debts – anybody with a mortgage should have life insurance cover to pay off the mortgage debt and other outstanding debts in the event of premature death, as a bare minimum
- People who run businesses – business owners should consider life insurance cover to protect the business in the event of the premature death of a key person in the organisation – this would provide a lump sum to keep the business going while you employ a replacement
- People who are shareholders in a business – business shareholders should consider life insurance which will buy out another shareholder in the event of their death to maintain control of the company
- People whose estate will be liable for inheritance tax – life insurance can be used to cover any potential inheritance tax liability arising from a person's death
Things to bear in mind:
- premiums for a term insurance policy are inexpensive and normally well within reach of most family's budget
- age, medical history and lifestyle may affect the cost of life insurance so it makes sense to arrange life insurance early in life, before any medical problems develop, to keep the premiums low
- waiver of premium can cost very little to include with your life insurance and other types of cover and it can prevent your policy from lapsing if you become unable to work and your income stops as your premiums
Cashback OfferUp to £100 cashback on life insurance
Our partner LifeSearch will help you get the best and cheapest life insurance.
- Search the market and all the leading insurers
- Free advice with no obligation to purchase
- Up to £100 cashback for new customers
Can you buy more than one life insurance policy?
There is no theoretical limit to the number of life insurance policies one person can buy. However, UK life insurance companies will ask about other life insurance policies you have. In addition, the reinsurers (who reinsure life insurance policies from multiple insurance companies) will want to know how much life insurance you have and how much of that life insurance has been bought with them. The reason they want to know this is to ensure that they are not over-exposed to the risk of your death.
If the insurer and/or you cannot provide a valid reason for an unusually high level of life insurance cover then they may not accept your life insurance application.
So you can buy multiple life insurance policies (2 or more), but the overall sum insured has to remain sensible.
You can read about this in more detail in our article, “Can you have more than one life insurance policy?“.
How to compare life insurance policies
We have sourced one of the best independent life insurance specialists in the UK (with almost 20,000 reviews on the review site Trustpilot and a score of 4.9 out of 5 stars) so that you can speak to a trusted expert who can help guide you to buying the best and cheapest life insurance policy for your needs. If you do decide to take out a policy you will also be eligible for up to £100 cashback. Just click on this link to get started – Compare Life insurance quotes*
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article – LifeSearch
