What is family life insurance?
Key takeaways
Family life insurance is an umbrella term which covers any life insurance policy that helps support your loved ones financially after your death
Family life insurance can cover the likes of mortgage repayments, debts, daily living costs, as well as expenses such as school fees
To determine how much cover you need, consider things such as housing costs, outstanding debts, day-to-day outgoings and funeral expenses
What is family life insurance?
Family life insurance doesn’t refer to a specific product, but is rather a term used for any life insurance policy that can help provide financial security for loved ones if you pass away.
The payout from such policies can help cover a range of expenses, from mortgage repayments and outstanding debts to everyday living costs and major commitments, such as school fees.
Essentially, family life insurance is a financial safety net that can help protect your loved ones from the financial impact of your death.
📣 Did you know: An estimated 29,600 parents die every year in the UK, leaving dependent children. That’s one parent every 20 minutes, according to the Childhood Bereavement Network.
Who needs family life insurance?
Family life insurance can help provide financial security for loved ones if you pass away. It may be something well worth considering if you are:
A parent with dependent children – as it can help cover the cost of raising them if you are no longer around
A single parent – and especially if you’re the sole source of income for your family
A homeowner with a mortgage – as the payment from this insurance could help cover outstanding mortgage repayments [add link], and reduce the financial burden on your family
A young adult starting a family – as taking out cover at a younger age[add link] can often mean lower premiums
How does life insurance work?
When a policyholder dies, their loved ones (known as ‘beneficiaries’) receive a payout which can help cover various costs. For example:
Clearing outstanding debt, including car payments and credit card balances
Keeping up with mortgage payments
Providing childcare and ongoing financial support
Establishing an inheritance
Covering funeral expenses
Different types of life insurance policy have different payout structures.
With level term insurance, the payout stays the same throughout the policy term. With decreasing term life insurance, the payout reduces over time, typically in line with a repayment mortgage.
Some policies also allow for a payout upon the diagnosis of a terminal illness during the policy term.
What are the different types of life insurance?
There are various types of life insurance policies that can be used to protect your family.
The different types include:
Level term life insurance
With this version, you decide how much cover you need at the beginning of the policy, and both premiums and the payout remain constant for the duration of the policy. It may be an option worth considering if you have children who depend on you financially. The downside is, this type of cover can be more expensive than other options, plus the payout may lose value over time if is not adjusted for inflation.
Decreasing term life insurance
With this option, the amount paid out when you die goes down over time. It is commonly taken out to cover a repayment mortgage, with the payout decreasing over time, in line with your balance. Premiums are generally cheaper than for ‘level term insurance’ and for some, it can be a cost-effective option.
In the past three months (between January and March 2026, 36%
Increasing term life insurance
The potential payout rises every year by a fixed amount for the duration of the policy, helping to protect against inflation. This means higher payouts, but also makes it more expensive than level or decreasing term insurance
Should I opt for a single or joint family life insurance policy?
A joint policy can be a more cost-effective option for couples. Just be aware that it will only pay out once, on the first death.
A single life insurance policy offers individual cover. This means if you are in a couple, your family could receive two payouts. And, if you split, you won’t have to take out a new policy.
How much life insurance cover do I need?
The amount of cover you need should reflect your personal and family circumstances. Consider factors such as:
Housing costs and mortgage repayments
Outstanding debts and loans
Day-to-day living expenses
Childcare and education costs
The average funeral cost in the UK
Our life insurance calculator can help you estimate the cover you need.
What are the alternatives to family life insurance?
Some alternatives that might suit your needs include:
Family income benefit: Offers a steady stream of income instead of a lump sum
Death in service: An employer benefit that provides a payout if an employee dies while employed
Income protection insurance: Replaces a portion of your income if you're unable to work due to illness or injury
Critical illness cover: As a standalone policy or an add-on, critical illness cover pays out upon the diagnosis of a specified serious illness
How do I find a good family life insurance policy?
Finding the right life insurance policy at a competitive price is quick and easy with MoneySuperMarket. Our platform allows you to compare different levels of cover and premiums to find a policy that fits your budget and meets your family's needs. This will give you the peace of mind of knowing your loved ones will be financially protected when you are no longer around.
Author
Rachel Ditchburn
Former Senior Commercial Manager
Rachel is a former Senior Commercial Manager at MoneySuperMarket, where she oversaw the Protection, Pet and Leisure Insurance channels. Outside of work, Rachel is a keen cook and enjoys live music,...
Reviewer
Esther Shaw
Money expert
Esther Shaw is an award-winning consumer, financial and property journalist with more than two decades of experience. As a freelance writer, she regularly contributes to a range of national titles...
