In this article we explain what life insurance is, why you need it, what you need to consider when buying life insurance and where best to get life insurance quotes*. We also compare the cost of life insurance quotes for £250,000 for a smoker and non-smoker and explain the cheapest way to buy life insurance in the UK.
1 minute summary
- A £250,000 life insurance policy can be set up so that it is paid to your dependents upon death or alternatively, you can nominate who you wish to receive the money by completing a trust form.
- The proceeds of a £250,000 life insurance policy can help to pay off your mortgage or other financial commitments such as loans or credit cards.
- Factors that impact the cost of your life insurance policy include the type of life insurance policy you choose, the term of the policy, your age, your health, your lifestyle, whether you smoke and your family history
- Premiums can start from as little as £5
- You can choose to take out a policy just for you or you could take out a joint policy with a spouse
- Speak to an independent life insurance specialist* to get a personalised quote. You'll qualify for up to £100 cashback if you decide to take out a policy.
What is life insurance?
Life insurance is a policy that can provide a lump sum or monthly benefit if you die or become terminally ill (and are likely to die within 12 months). The money is paid to your dependents upon death or alternatively, you can nominate who you wish to receive the money by completing a trust form.
The proceeds of a life insurance policy can help to pay off your mortgage or other financial commitments such as loans or credit cards. A life insurance policy can also provide a lump sum or monthly benefit that will help to replace the loss of your earned income.
Which life insurance policy is right for you?
Level term life insurance
The life insurance amount remains the same throughout the term of the policy, at the end of which the life cover will cease. Good for paying off an interest-only mortgage or where you want to provide a set lump sum for your dependents.
Decreasing term life insurance
The life insurance amount reduces throughout the term of the policy, at the end of which the life cover will cease (sometimes referred to as mortgage decreasing cover or mortgage protection assurance). Good for covering a reducing debt such as a loan or repayment mortgage.
Whole of life insurance
The life insurance amount is provided for the whole of the insured person's life and will pay out in the event of death whenever that occurs. Premiums must be paid up until death and so there is no set term. As the payout is guaranteed, a whole of life policy can often be more expensive than level term insurance. Good for covering a potential inheritance tax liability.
Over 50's life insurance
A life insurance policy for people aged 50 and over. There is no underwriting, meaning you are guaranteed to be accepted. Good for those with complex medical issues and who are only looking for a small amount of life cover to pay out when they die.
Family income benefit
The life insurance amount is paid monthly, tax-free, instead of a lump sum in the event of death. As the benefit is paid monthly, the potential payout reduces each month and so as a result, the premium you pay from outset will be less. Good for those looking for a cost-effective way to insure a partner's income.
Joint life insurance
Life insurance is typically payable upon death of either of the policyholders. Often referred to as a ‘joint life, first death' policy, partners can take out a joint policy, knowing that if either of them dies, the insurance will pay out to the surviving partner. Good for covering joint assets such as mortgages or loans.
Single life insurance
Life insurance that covers one person and only pays out if that person dies within the contract parameters of the policy is called single life insurance. Often, two people looking to insure themselves together will find that buying a single life insurance policy each instead of joint life insurance is more beneficial as the cost increase is nominal but buying single life insurance policies provides a payout for each life and could potentially double the claim amount if both people died. If one person dies then the other person's life insurance would continue – a joint life insurance policy would only pay once and lapse in a similar scenario, leaving the surviving person with no life insurance.
We go into more detail about the different types of life insurance in our article ‘Best and cheapest life insurance in the UK'.
Do you need life insurance? What you need to know
There are many reasons why you might be considering buying life insurance but it is important to understand when it is and isn't needed. Life insurance should be used to ensure that the people you leave behind are not financially affected by your death. If you are thinking of buying life insurance purely to leave a pot of money to someone, then you should also consider saving or investing the money as an alternative, as insurance can get expensive and if you cancel the premiums before you die, then the policy will not pay out.
Questions you should ask yourself when considering buying life insurance
To understand whether you need life insurance you should ask yourself the following questions:
- Do people rely on you financially?
- Does anyone rely on your income?
- Do you care for a child or adult who would require paid care if you died?
- Have you got any debts, such as a loan or mortgage?
If your children, partner or other family members rely on you or if you have debts, then it is likely that your family will benefit from you having life insurance.
You should consider how long you will need life insurance – there is no average life insurance term as this is adaptable to your needs. You'll find useful information and important factors to consider in our “How long should I take out life insurance for?”
If life insurance isn't for you, what should you buy?
If you do not have any debts (such as loans, credit cards or a mortgage) and you don't have any dependents then you may be better off considering other types of insurance.
Anyone who is reliant on themselves and generates an income that sustains them should consider the effect that sickness or injury would have on their ability to continue doing this.
Income protection or critical illness insurance are policies that are designed to pay you in the event of you being unable to work or critically ill, meaning that you benefit from the money when you really need it and you can continue living a good quality of life. Check out our articles ‘Best and cheapest critical illness cover in the UK' and ‘Income protection – do you really need it?'.
What can affect the cost of life insurance quotes?
Life insurance premiums are based on a number of factors and the cost of your life insurance will take into account the following:
- the amount of life insurance cover you require
- the type of life insurance policy you are applying for
- the term of the policy (the length of time you want to take the policy for)
- your age
- your health
- your lifestyle (including any dangerous activities and how much you drink)
- whether you smoke or not (including whether you vape)
- your family history
Up 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
How much does £250,000 life insurance cost for non-smokers?
Below we have produced a table which shows the monthly premiums for £250,000 life insurance over 25 years for a non-smoker. We look at Level term insurance, decreasing term insurance and family income benefit and show example quotes for a 25, 30, 35, 40, 45, 50 and 55 year old.
Monthly cost of £250,000 life insurance (non-smoker)
| Monthly premium for: | |||
| Age | Level term insurance | Decreasing term insurance |
Family income benefit
|
| 25 | £6.43 | £5.40 | £5.24 |
| 30 | £9.01 | £6.69 | £6.00 |
| 35 | £12.12 | £8.58 | £7.20 |
| 40 | £17.23 | £11.73 | £9.65 |
| 45 | £28.01 | £17.37 | £14.18 |
| 50 | £44.54 | £27.26 | £22.72 |
| 55 | £75.73 | £44.05 | £37.30 |
Quotes are based on non-smoker rates over a 25-year term and family income benefit quotes are based on a £10,000 annual income
How much does £250,000 life insurance cost for a smoker?
Below we have produced a table which shows the monthly premiums for £250,000 life insurance over 25 years for a smoker. We look at Level term insurance, decreasing term insurance and family income benefit and show example quotes for a 25, 30, 35, 40, 45, 50 and 55 year old.
Monthly cost of £250,000 life insurance (smoker)
| Monthly premium for: | |||
| Age | Level term insurance | Decreasing term insurance |
Family income benefit
|
| 25 | £10.53 | £7.79 | £6.99 |
| 30 | £14.85 | £10.75 | £8.63 |
| 35 | £23.12 | £15.57 | £11.75 |
| 40 | £38.63 | £24.16 | £18.35 |
| 45 | £63.83 | £40.87 | £32.86 |
| 50 | £107.64 | £70.49 | £55.95 |
| 55 | £278.74 | £213.04 | £94.69 |
Quotes are based on smoker rates over a 25-year term and family income benefit quotes are based on a £10,000 annual income
How to guarantee the cheapest life insurance quotes for £250,000
The best way to guarantee the cheapest life insurance quotes in the UK is to speak to an independent specialist*. There are plenty of online life insurance calculators that can give you a basic ‘guideline' price, but they are unable to tailor a quote to your individual circumstances.
How an independent specialist can help you find the best life insurance at the best price
- Search the whole of the market (Online life insurance comparison sites do not always check the whole of the market, meaning you could be missing out on the cheapest quotes)
- Give independent advice on the best type of policy and ensure that you are purchasing the correct amount of cover
- Help complete your application forms as well as chase up the application with the insurance company
- Understand your medical history and put you in touch with the insurance company that will provide the best quotes post-underwriting (for example, the cheapest insurer may increase your premiums based on your answers to the health questions, whereas another may not. The cheapest pre-underwriting quote, therefore, is not always the best and could mean that you end up paying higher premiums than you need to)
- Help you to complete a trust form to ensure the proceeds are paid to the right people and without the need to pay inheritance tax or go through probate
We have personally vetted the services of a specialist insurance broker* that will be able to do all of the above for you. The firm employs strong ethics and will only ever offer a policy if it is the best policy to suit your needs taking into consideration any pre-existing medical conditions you may have; something we witnessed for ourselves when we visited their offices recently.
To speak to an adviser, with no obligation to take things further, just fill in the form via the above link. If you do decide to take out a suitable life insurance policy you will also qualify for up to £100 cashback.
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