Life insurance advice UK

14 min Read Published: 07 Apr 2022

Life insurance advice UKIn this article, we explain how life insurance works and whether you need advice. If, after reading this article, you need further help, we explain the best way to get free life insurance advice as well as how to get up to £100 cashback when you take out a life insurance policy.

Do you need life insurance?

If the people in your life require access to money to pay for things after you die then you need life insurance. Life insurance can prevent financial hardship for the people left behind in your life.

The main reasons why people need life insurance

  • Children/Dependents - money needed to pay for everyday and occasional costs involved with raising children and keeping households running
  • Debts - money to clear or reduce debts including mortgages, loans and credit cards
  • Funeral - money to pay for the immediate cremation/burial and wake costs
  • Inheritance Tax - money that is paid outside your estate to your beneficiaries to pay for inheritance tax

Which life insurance is best for you?

Working out which life insurance policy is best for you starts with understanding why you need it. Different types of life insurance are designed to cover different needs.

Below we look at the most common reasons for taking out life cover and suggest which types of life insurance are relevant. You can click on the policy types to read more about each type of insurance.


A family income benefit life insurance policy pays a regular income to your dependents if you die. It is usually the most cost-effective and appropriate type of life insurance to take care of your family's day-to-day living costs. You can supplement this with a level term assurance policy that will pay out a lump sum of money to your family that they can use for the immediate funeral costs and perhaps put away for a rainy day.


Interest-only mortgages and loans are best covered by a level term life insurance policy where the amount that you are covered for remains the same throughout the term of the policy. This means that the amount of money that will be paid if you die doesn't change over time. A repayment mortgage can be covered using a decreasing term life insurance which is sometimes called mortgage protection life insurance. This type of life insurance policy reduces in value as the years pass so that it tracks the amount needed to pay the balance of the repayment mortgage as it steadily reduces. Although the decreasing term life insurance can be a cheaper option, there's nothing to stop you from buying a level term life insurance so the amount paid if you die, doesn't reduce.


There are a number of life insurance companies that offer over 50s life insurance policies for people who just want to make sure that their funeral costs are covered when they die. These policies don't ask for your medical history and are usually attractive to those people over the age of 50 who have health conditions, as other types of life insurance may be too expensive or unavailable. If you're in good health, you'll usually find better value life insurance in the form of a level term life insurance or whole of life insurance policy as these types of policy are likely to give you more cover for your money. With whole of life insurance, do check whether your monthly premium is guaranteed or reviewable as reviewable premiums can and usually do increase over the years and may become unaffordable to maintain.

Inheritance Tax / Leaving a gift

Whole of life insurance will cover your life until you die. You can buy this type of life insurance policy and put it into a trust which will allow you to nominate your beneficiaries. This ensures that the money goes to the right people and keeps the money outside your estate to avoid adding to any inheritance tax that might be due. Your beneficiaries can then use the money to pay towards any inheritance tax that is due on your estate. If you don't put the whole of life insurance policy into a trust and you die, the money will be paid into your estate and will inflate the estate's value which may increase the inheritance tax applied to it. Again, check whether the monthly premiums are guaranteed or reviewable - reviewable premiums can and usually do increase over time.

Contrary to what most people think, getting advice and tailoring your life insurance usually reduces your monthly premium.

Speaking to a life insurance expert will help you to tailor your life insurance and we explain how to do this further on. You can also read our article, "Best and cheapest life insurance in the UK" where we go into more detail.

Is it better to get joint or single life insurance?

Having joint financial responsibilities like rent, mortgage payments, bills and parenting might make joint life insurance look like the obvious and best answer - it might be the obvious answer but it's almost never the best one.

Joint life insurance covers both your lives and it'll pay out once if either of you dies but then it stops and there's no ongoing protection insurance for the surviving person. That's not good - especially if you have children. Furthermore, if you both died together, it would still only pay out once and most people recognise that losing both parents is going to be far more financially devastating than losing one.

The argument is usually that joint life insurance is cheaper than two separate, single life insurances. This is true but there often isn't a significant difference in cost. Actually, if one of you has health conditions, you might even be better off buying life insurance with the insurance companies that are best for you separately. So, while one of you could get a better price with one life insurance company because it treats your health more fairly, the other person could choose a different company based on the best price for them.

Below, you'll find the prices for joint a life insurance policy versus two single life insurance policies for different age ranges. The quotes are based on £200,000 over 20 years. You'll see that the difference to the monthly premium is relatively small but the potential payout is doubled.

Joint life insurance v 2 single life insurances - Cost comparison

1 x Joint Life Insurance Policy

(Maximum potential payout is £200,000)

2 x Single Life Insurance Policies

(Maximum potential payout is £400,000)

2 people in their 20s £7.35 £9.72
2 people in their 30s £11.73 £13.28
2 people in their 40s £22.23 £25.00
2 people in their 50s £53.13 £58.18

*prices based on non-smokers

If you choose to buy two single life insurance policies, the proceeds from the claim may not automatically reach your partner. You should nominate them or anyone else you wish to leave the money to. This is especially important if you're unmarried. It isn't a difficult task and you can nominate more than one person and split the benefits as you wish. We'll explain more later under the 'How to buy' section of this article.

How much life insurance do you need?

Here is a summary of the most common concerns people have and how to work out the amount of life insurance to allocate to each.


If these are only in your name, they'll form part of your estate after you die and will be repaid using your assets during a process called probate. If you're happy for this to happen then perhaps you won't want to include the value of these in your life insurance. If you want your life insurance to provide your family with the money to pay these off then you can include them. You'll need the balance and time left on your loans.


You can choose whether you would want enough money to pay off the whole mortgage balance or whether you're happy to reduce it to an amount that your partner or family will be able to manage if you pass on. If you have a repayment mortgage, you can choose decreasing life insurance which will reduce in line with your mortgage balance. This insurance costs less than a level one but we recommend that you get quotes for level and decreasing options because sometimes there isn't much difference in the cost and having a level life insurance policy provides more cover.


If your income supports your family's bills and living costs, you'll need to work out how much money your family will need to maintain their lifestyle without you. A family income benefit policy will provide an ongoing income for the remainder of the term of the policy so it is wise to choose a term that will

Inheritance Tax

The amount of inheritance tax applied to your estate has to be calculated using the inheritance tax threshold (£325,000 in 2022/23) as well as other factors. If your estate is complex, you may wish to speak to a financial adviser to discuss ways of minimising your potential inheritance tax liability. Otherwise, use our inheritance tax calculator which will help you to work out if and how much inheritance tax may be applied to your estate after your death.

How does death in service work and can I offset it against how much life insurance I need to buy?

If you have life cover through your employer, you can choose to deduct the value of death in service from how much life insurance you need. Death in service is usually calculated as a multiple of your salary and can be between 1 to 10 times your annual salary. Some people choose not to take their death in service into consideration when working out how much life insurance they need because they may lose it if they changed jobs or their employer stops providing it - seeing it more as a bonus if it does pay out.

Most people need to cover multiple things during their lives and buying a separate life insurance policy for each one isn't always economical. Speaking to a life insurance expert* can help you to consolidate your needs and wishes into a cost-effective and manageable life insurance solution. Read on to find out how to do this.

How much does life insurance cost?

The cost of life insurance is calculated using your age and whether you are a smoker or non-smoker. However, this price can, and often does, change once you answer questions about:

  • Your health
  • Your family's health
  • Lifestyle and hobbies
  • Occupational risks

The real price will be offered to you once you have completed an application form and once the underwriters (people who assess your application at the insurance company) have assessed this and made their decision.

Going through an application process in order to find out the true price can be time-consuming and is a source of frustration for some people.

It helps to speak to a specialist life insurance adviser* so that you can discuss your health, lifestyle and occupation before selecting your insurance options. Specialists will know which life insurance companies will treat you the fairest in terms of price and cover and they'll be able to give you a good indication of what your life insurance will cost before you complete the full application process. They'll also help you to tailor your life insurance to suit your budget so that you can maximise your benefits for what you want to spend.

Things to consider before buying life insurance

Critical illness cover - do you need it?

Critical illness insurance pays a lump sum or an income to you if you are diagnosed with one of a number of specific serious illnesses. It can be added to life insurance or bought separately and is popular due to the increasing incidence of cancers, heart disease and other serious illnesses. It is designed to provide you with a cash lump sum to help you through a period when you may lose money because you can't work or have to spend money on making changes to your lifestyle to accommodate the illness and its effects.

You're about 5 times more likely to need to claim on critical illness insurance than on a life insurance policy during your working life so it is worth considering and could make a challenging situation somewhat easier to manage. Check out our article "Critical illness - What is it and is it worth having?"

Income protection - do you need it?

Income protection insurance which is sometimes called sick pay insurance replaces your income if you're unable to work. You can cover up to 65% of your untaxed income so that if your doctor signs you off work as unfit, you'll be able to claim this benefit. Claims are based on your incapacity to work rather than on the diagnosis of a particular illness.

State benefits like statutory sick pay will still be available to you but at around £95 per week, they don't meet most people's needs in such circumstances. Some employers would continue to provide an income while you recover so you should check this before buying income protection insurance. Check out our article "Income Protection: Do you really need it?"

Should I get term or whole life insurance?

Term life insurance pays if you die within your chosen term. The term is the number of years that you buy your insurance for and you can usually choose between 1and 40 years. It's suitable for you if you want to cover your mortgage or make sure your family has enough money to live on while your children are growing up, should the worst happen. Paying off your mortgage/debts and raising your children won't last forever and you only need to insure yourself until you've completed these responsibilities and this matches how term life insurance works. It will provide better value for money because the insurance company only pay out if you die within the term of your policy.

Whole of life insurance pays out when you die and not if you die and because it has to pay out eventually, insurance companies price these protection products accordingly. Death is inevitable and there are some concerns that remain, regardless of how long we survive. Funeral expenses and inheritance are among the long-term bills you may wish to fund with a whole of life insurance policy. Most people leave buying a whole of life insurance policy until later in life when their term life insurance is about to expire. Logically, it can feel like the right time to do it but later life is when you're more likely to have health conditions which could, in turn, make it expensive and difficult to arrange life insurance. If you know that you will want to buy life insurance that covers you until you die, it may be more sensible to start paying for it sooner. Some of the cost analysis that we have done at Money to the Masses shows that starting to pay premiums for a whole of life insurance policy at a younger age can cost end up costing you less in the long run. Starting to pay higher premiums at an older age and paying it for a shorter number of years is usually more expensive than paying a cheaper premium from a younger age over a longer time.

Why you should put life insurance in trust

A trust is a legal document that allows a policyholder to lay out what should happen to the benefit from the death claim. The document will ask you to nominate your trustee(s) who will be responsible for carrying out your wishes when you die. It will also ask you to nominate your beneficiaries and how to split the benefits if appropriate. Ensuring that the money from your death claim reaches those who you intended to benefit can give you great peace of mind. But besides this, you'll also avoid the money adding to your estate and potentially becoming liable for inheritance tax. At 40% that could be a very large chunk of the benefit that is lost to HMRC without a trust in place. A life insurance specialist will be able to help you complete the trust and provide guidance to set it up to reflect your wishes.

Where can I purchase life insurance?

There are a few different routes to buying life insurance and each can have its benefits as well as drawbacks. Here we look at the most common routes to buying life insurance and explain what you can expect.

Non-regulated Mortgage / Life insurance broker

A broker or non-regulated adviser can provide you with access to some quotations for life insurance and may even be able to explain the features and benefits of different products for you. However, they'll usually stop short of giving you specific advice. This means that you have to take responsibility for making your own choices as they will not be responsible if you end up with the wrong product for your circumstances.

To compensate for the lack of advice, you'll usually find they try to make the process simple and quick to attract customers. Often people who are arranging their mortgage will believe that it is better or even necessary to buy life insurance with their mortgage adviser - this is not usually the case. Do be wary of signing terms and conditions with a mortgage adviser that commit you to buy your life insurance with them too. Check out our article "Should you buy life insurance through a mortgage broker?"

Regulated Financial Adviser / Life insurance specialist

A regulated adviser is usually trained to give financial advice and guidance on what is best for your circumstances and they usually hold industry qualifications to prove their competence. Their process usually involves gathering enough information to understand your needs and recommend the right solutions for you. You'll usually receive a report highlighting your needs and how they are met with the solution that the adviser has recommended. They can be held responsible by the financial conduct authority if they don't do this. Good regulated advisers also provide you with advice and support to arrange trusts, wills and nominate your beneficiaries. They'll usually support you and your family if a claim needs to be made too.

Our research shows you're very likely to find the best-priced, quality life insurance products that are suited to you, this way. Life insurance specialists usually provide better prices as they are focused on this niche area of financial advice and can command more economies of scale with the insurance companies. Financial advisers don't always have the same access to competitive rates in comparison.

Comparison sites/Online

Comparison sites usually ask you to make a series of choices before showing you price comparisons based on what you choose. As they rarely offer advice, you are responsible for making the correct choices and proceeding with the suggested solution. Comparison sites can be limited to searching the price across a handful of life insurance companies and not all of them, as you might expect so you may miss out on a better deal elsewhere. They do offer you the convenience of buying your life cover from your armchair without speaking to someone but this convenience could end up costing you in the long run.

Wherever you choose to buy your life insurance, take the time to understand the following:

  • Do you have to pay anything other than your monthly premium?
  • Will you have access to all the products and prices available in the market?
  • Are there any incentives such as trust and will advice included?

How to buy the best and cheapest life insurance?

Life insurance companies and agents advertise everywhere - from the television to social media timelines to football pitches. Although the brand of a particular life insurance company can be appealing, most people like to compare the price and quality before making their decisions. There are a number of ways to do this.

At Money to the Masses, we have tried and tested the different routes to buying life cover and found that speaking to a specialist life insurance adviser or regulated financial adviser offers the best outcome in terms of service and price. Life insurance is often a small part of the overall business that financial advisers do meaning they may not always get the best deals in the market. So, specialist life insurance advisers who are regulated would be our choice. They have access to the whole market, provide expert regulated financial advice and can access some of the best prices too.

You can arrange to speak to a specialist life insurance adviser by completing this short form* and as a Money to the Masses reader, you'll receive 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. This 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