What is life insurance?

Life insurance gives you peace of mind that your loved ones will be taken care of financially when you're no longer around. It can cover essentials like the mortgage, rent or household bills, and help support a more comfortable lifestyle in the future.

There are a few types of life insurance, but most policies fall into two categories: term life insurance and whole-of-life insurance. Term life insurance covers you for a set period and only pays out if you die during that time. Whole-of-life insurance lasts your entire lifetime and guarantees a payout whenever you pass away.

You can tailor your policy to suit your needs. Whether it’s just for you, you and your partner, or the whole family, there’s a plan that fits. As well as paying out on your death, some plans let you add cover for terminal or critical illnesses, providing financial support to help you cope at a difficult time.

Why choose life insurance?

Life insurance is all about thinking ahead. If you were to pass away tomorrow, what would that mean for others? If people depend on you financially, the right type and level of life insurance could make the world of difference at a difficult time.

Support your loved ones

A financial cushion to help cover day-to-day living costs.

Pay off your mortgage

A lump sum payment to clear your mortgage balance.

Cover funeral costs

Reassurance that funeral expenses will be taken care of.

Clear outstanding debts

Pay off personal loans, credit cards or other debts.

Protect your children’s future

Money set aside for education, childcare or other long-term needs.

Cover for illness

Add critical illness cover to help your recovery.

What are the main types of life insurance cover?

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Level Term Life Insurance

Fixed cover and premiums, providing consistent protection for as long as you need.
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Decreasing Term Life Insurance

Cover that reduces over time, ideal for protecting repayment mortgages.

Other types of life insurance

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Critical illness Cover

Financial support for serious illness, helping to cover expenses during difficult times.
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Joint Life Insurance

Cost-effective protection for couples and others with shared financial commitments.
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Over 50s life insurance

Guaranteed acceptance and lifelong protection to cover expenses and give your family peace of mind.
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Whole life insurance

Long-term protection for your loved ones, and peace of mind for you.
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Income Protection

Insurance that pays a regular income if illness or injury stops you working.
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Life Insurance For Families

Flexible protection designed to safeguard your family’s future, no matter what life brings.

What does life insurance cover?

Typically covered

Life insurance is designed to pay out a lump sum if you pass away during the agreed policy term (either a set period or for the rest of your life). It could clear outstanding debts, replace lost household income, cover school fees… it’s up to you.

Some policies also come with standard or optional extras, including:

Terminal illness cover: Typically pays out early if you’re diagnosed with a condition that’s expected to be fatal within a certain time (e.g. 12 months).

Critical illness cover: Pays out if you are diagnosed with a serious illness covered by the policy.

What isn’t covered?

While life insurance offers valuable protection, there are a few situations where a claim may not be paid:

  • Missed payments: If you stop paying your premiums, your cover could end.

  • Suicide: Many policies exclude death by suicide within the first 12 months.

  • Fraud or non-disclosure: If you aren’t honest and accurate when applying, the insurer could refuse to pay out.

  • Excluded health conditions: Some policies may include exclusions based on your medical history, for example, if you have a pre-existing condition.

  • Outliving your policy: If you survive the policy term, the cover ends and there’s no payout.

Other events may not be covered, such as death due to war or participation in extreme sports. Please see each policy’s exclusions and limitations: always read the small print to make sure you understand the terms and conditions.

What to look out for when choosing life insurance

It’s easy to rush into taking our life insurance without checking that it’s right for you and your loved ones. Here are some things to watch out for, so you can choose the right cover with confidence:

  • First, check that you really do need life insurance: Some employers include life insurance as part of a benefits package (death in service), so it’s worth checking if you’re unsure. But do bear in mind that it might not be enough on its own.

  • Choose the right term: Whole life policies cover you forever, while term insurance covers you for a set period. Think about what works best for your situation.

  • Looking for a return on your premiums?: Some whole life policies let you cash them in if you wish at a later date, while term insurance won’t do that. If getting a return in your lifetime is important, make sure you choose the right policy.

Remember - taking out life insurance means entering a contract with the insurer. As with all contracts, take a little time to make sure you understand all the terms and conditions.

Life insurance guides

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Page updated on 16th October 2025, Reviewed by Richard Groom