How long should I take out life insurance for?

11 min Read Published: 14 Oct 2021
What is the best length for your life insurance policy?
What is the best length for your life insurance policy?

In this article we explain what life insurance is, whether it is right for you and how long you should take out life insurance for. We would recommend that you read the whole article, as we go on to explain how to obtain the best value life insurance quotes including how to get up to £100 cashback.

What is the best length of life insurance policy?

The length of your life insurance policy will be personal to you and should be based on the reason you need the cover. Working the number of years or term that you buy your life insurance for can be confusing but understanding your reason for the insurance will help.

How long should I have life insurance for my mortgage?

If you have a mortgage, you need to ensure that the term of the mortgage is covered. So, the number of years that your life insurance policy covers you for matches the number of years until your mortgage is paid off. If you're planning to pay your mortgage off early, you should still consider buying life insurance for the full term and simply cancel it once the mortgage is paid off. This ensures that your life insurance won't run out too early if repaying your mortgage early does not go as planned.

How long should I have life insurance for my family?

If you have children, you should take the policy over a time period that will ensure the children are grown up and able to financially support themselves. Life insurance is more expensive the longer you take it, so you should only take it for as long as you need it. However, do remember to factor in any planned children so that your life insurance covers your youngest child until they are independent.

If you are in any doubt, we would recommend that you take advice, as it is free and gives you peace of mind that you are buying the right cover. It's also important to make sure you choose the correct term for any life insurance policy. We've partnered with a protection specialist that can help you (plus we have personally vetted their service).

Simply complete this simple form* and they will be in touch at a time that suits you. They will help you find the best possible cover at the best possible price with an appropriate term. Additionally, you could get up to £100 cashback if you take out a policy.

What is life insurance?

There are a few different types of life insurance which we go on to talk about in more detail below, but broadly speaking, the term “life insurance” refers to a policy that is typically taken out over a fixed term and if the person dies within that term, the policy pays out. Most policies will run for a term of between 5 and 25 years (although this could be longer) and if the policyholder dies within that term, the insurance company will pay out the amount that was agreed at the start of the policy term (the sum assured).

What types of life insurance are there?

There are various different types of life insurance including Level term insurance, Decreasing term insurance, Family income benefit, Increasing term Insurance (Index-linked), Over 50s life insurance and Whole life.

Level Term

The amount you are insured for remains the same throughout the policy term (It neither increases or decreases) This is good should you want to know exactly how much will be paid out upon your death.

Decreasing Term

The potential payout decreases throughout the policy term, either in equal instalments or more often in line with debt, like a loan or mortgage. This is a popular option for those who want to cover a repayment mortgage in the event of death, as it is cheaper than Level Term cover and guarantees that the mortgage will be cleared in full should you die.

Family Income Benefit

This is a type of decreasing term cover that is designed to pay an annual or monthly amount should you die within the policy term. You can choose the amount of cover that you wish to be paid out should you die, and upon death it would continue to pay out for the remaining term on the policy. This is cheaper than Level term cover as the longer you live, the less money can be paid out.

Increasing term insurance (often referred to as index-linked level term)

The amount you are insured for increases over time to keep pace with inflation. You can choose to increase it by a fixed amount, say 5%, or it can be linked to RPI (The Retail Prices Index) Premiums will go up each year by the same measure.

Over 50’s Life Insurance

Over 50s life insurance is a type of Life insurance policy for anyone aged over 50 with most policies providing guaranteed acceptance. Premiums are paid monthly or annually and so long as premiums are kept up to date, the policy is guaranteed to pay out should you die.

Whole life

Whole of life cover guarantees that the insurer will pay out a lump sum whenever you die rather than within a specified time frame. This policy can be quite expensive as you will need to ensure that you continue paying premiums right up to your eventual death. If you stop paying your premiums at any point, the policy stops and you lose the money you have paid in. Another commonly used name for this type of policy is Whole of life assurance.

Do I need life insurance?

The question you need to ask yourself is that in the event of your death, will someone be financially worse off as a result? Do people rely on you financially? Do they rely on your income? Have you got debts, such as a loan or mortgage? If your children, partner or other family members rely on you financially or if you have debts, then it is likely that your family will benefit from you having life insurance arrangements in place. If you do not have any debts or dependants, it may be better to consider income protection or critical illness insurance which are policies designed to pay you in the event of you being unable to work or upon diagnosis of a particular illness, meaning you benefit from the money when you really need it and can continue living a good quality of life.

How much life insurance do I need?

The amount of life insurance cover you need will depend on your own personal circumstances. Things you will need to consider when working out the amount of cover you need are your loans (including your mortgage), the cost of a funeral and crucially the cost of replacing your income. You need to consider how many children you have and how old they are in order to work out the approximate amount of income to replace. We would recommend that you read our article - "How much life insurance do you need'  this will take you through a process to calculate your correct amount of life insurance and we think you will be surprised by just how much you may need.

Once you know how much cover you need, the next thing you need to do is shop around to get the best value life insurance quotes. Often when comparing quotes online, say for car insurance, it is difficult to work out the true cost as insurers will often have different features, such as courtesy cars and differing levels of excess. Life insurance, simply put, is the same policy wherever you buy it; so it is, therefore, crucial that you shop around to get the best value life insurance quotes.


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