Choosing the right life insurance can feel overwhelming, especially if you’re comparing policies for the first time. The market offers several options designed for different needs, circumstances, and budgets. This guide breaks down the main types of life insurance available in the UK and explains who each type may suit.

If you’re unsure which option is right for your situation, a financial adviser offering the best service and transparent fees can help you assess your needs and long-term goals. (book a meeting with an adviser)

What Life Insurance Should I Consider?

Different policies are designed for different priorities—such as supporting loved ones, protecting a repayment mortgage, or securing financial stability during illness. Before choosing a policy, consider:

-Whether you want cover that supports more than your mortgage

-Whether you prefer premiums that stay level or rise with inflation

-Whether you want to add critical illness protection

-Whether you want short-term cover or a guaranteed whole-of-life payout

Life Insurance Explained

Life insurance provides financial security for loved ones if you pass away while the policy is active. There are two broad types:

1. Term Life Insurance

This covers you for a fixed period—typically chosen to match a mortgage term or major life milestones. A payout is made only if you pass away or meet the policy’s terminal illness criteria during the term.

2. Whole-of-Life Insurance

This provides lifetime cover, guaranteeing a payout whenever you die, as long as premiums are maintained. It is often used for inheritance planning or to leave a gift for loved ones.

Types of Term Life Insurance

Decreasing Term Life Insurance

Often used for repayment mortgages, the payout reduces roughly in line with the mortgage balance, while premiums typically stay level. This can be a cost-effective way to secure your home should the worst happen.

Pros

-Usually lower cost than level term

-Flexible term and cover amount

-Add-ons like critical illness cover may be available

Cons

-Payout reduces over time

-Must ensure cover matches your mortgage arrangements

-May not suit needs beyond mortgage protection

Level Term Life Insurance

Here, both the payout and premiums remain the same throughout the policy term. Many consider this the top choice for broader family protection.

Pros

-Consistent payout

-Can support childcare, bills, rent/mortgage, and other expenses

-Option to add critical illness cover

Cons

-Usually more expensive than decreasing cover

-Payout doesn’t rise with inflation

-May be subject to Inheritance Tax unless placed in trust

If you’re unsure which approach suits your goals, speaking with a financial advisor who can help you find financial adviser options from an independent adviser network can clarify your choices. (book a meeting with an adviser)

Increasing Term Life Insurance

This type increases the payout each year, often in line with inflation. Premiums rise accordingly, offering long-term protection against the rising cost of living.

Pros

-Helps maintain real-terms value of protection

-Covers a broad range of expenses

-Offers peace of mind as costs rise

Cons

-Premiums rise each year

-Typically more expensive than level or decreasing cover

-Increases are usually reviewed annually

Critical Illness Cover

Critical illness cover can be added to many life insurance policies for an additional cost. It pays out if you are diagnosed with a covered serious illness during the policy term.

Pros

-Provides financial support during life-changing illness

-Covers a wide range of conditions

-Children’s critical illness cover often included

Cons

-Covers only specified illnesses

-Additional cost

-Must survive a set number of days after diagnosis for payout

Terminal Illness Cover

Terminal illness cover is often included automatically in standard life insurance policies. It pays out the full amount if your life expectancy is less than 12 months and the definition of terminal illness is met.

Single vs Joint Life Insurance

Single Life Insurance

-Covers one person

-Pays out once on valid claim

-Often more expensive for couples but both policies can pay out

Joint Life Insurance

-Covers two people

-Pays out once on the first claim

-Usually cheaper, but only one payout is made

Choosing between them often depends on your household’s financial structure and whether both partners need continued cover.

Over-50s Life Insurance

For people aged 50–80, over-50s life insurance offers guaranteed acceptance with no medical questions. It provides a fixed cash sum on death, often used for funeral expenses or small gifts to family.

Pros

-Guaranteed acceptance

-Fixed premiums

-Most claims paid very quickly

Cons

-Premiums may exceed payout over time

-Cash sum does not rise with inflation

-No cash value without a valid claim

Who Can Benefit From Each Type?

Other Term Policy Options

You may come across renewable or convertible term policies from some providers. Renewable terms allow extension without a new medical, while convertible policies let you switch to whole-of-life cover. Availability varies by provider.

Ready to Choose the Right Life Insurance?

The best policy is the one that suits your needs, budget, and long-term financial goals. If you want tailored guidance, a financial adviser or certified adviser experienced in pensions, family protection and wider financial planning can help ensure you choose well. (book a meeting with an adviser)

Life insurance is not a savings or investment product and has no cash value unless a valid claim is made.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.