Life Insurance

Helping to protect you and the ones you love

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What is life insurance and how does it work?

Life insurance pays out a lump sum to your dependants should you pass away or be diagnosed with a terminal illness during the term of your contract, in order to provide for them after you're not around. 

The cost of your premiums is determined by various factors including your age, health and lifestyle. Not every death is covered by life insurance, but here’s what you can expect from a standard policy:

Covered

Tick

Death from unexpected illness

Tick

Accidental death

Sometimes covered

Question mark

Terminal illness

Question mark

Suicide

Not covered

Cross

Drug or alcohol abuse

Cross

Undisclosed health issues

Why buy life insurance with us?

Find the right life insurance policy and protect your loved ones with MoneySuperMarket

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Leading UK providers

We work with a number of the UK’s leading life insurance companies to offer you high quality cover at a competitive price

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It doesn't take long

Fill in a few details about your age, health and circumstances and you’ll be able to compare life insurance quotes quickly

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Buy online

Some prices will be accurate, guaranteed and underwritten, so you can buy immediately online. For others you’ll need to confirm details with the insurer

Which life insurance brands do we work with?

We compare 12 of the leading life insurance brands in the country, including:

See more providers

How much does life insurance cost?

The average cost of life insurance for smokers and non-smokers

Age

Average monthly premium

16-24

£6.60

25-34

£12.28

35-44

£18.28

45-54

£22.38

55-64

£24.34

*51% of customers who went on to purchase achieved a quote based on the figures above for level term, life-only (without critical illness cover) single person policies. MoneySuperMarket data July 2019 to June 2020.

Life insurance jargon buster

Life insurance can be pretty confusing – so if you’re struggling to tell the difference between ‘the sum insured’ and ‘decreasing-term insurance’, we’ve created a handy jargon buster. You’ll be an expert in no time.

Life insurance calculator

For a clearer idea of just how much cover you will need when you buy, try the MoneySuperMarket life insurance calculator. It takes into account your outgoings, including things like mortgages, debts and the cost of raising children.

What do you need to get a life insurance quote?

Finding the right life insurance policy is easier when you compare your options with MoneySuperMarket. You’ll be asked to provide: 

 

Heart

Information about your health

Insurers will need details about you and your family’s health and medical history, including pre-existing medical conditions

Weights

Information about your lifestyle

Insurers will also ask about your lifestyle habits, including whether you smoke and drink

Suitcase

Your age and occupation

The younger you are when you take out a policy, the cheaper it’s likely to be. Your occupation can also affect how much you pay 

People

Your partner’s details

If you want joint cover, you’ll need to have your partner’s health and lifestyle details to hand, as well as their occupation 

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Unlike some of our competitors, MoneySuperMarket is not owned by an insurance company. So we can offer the best value, with savings delivered straight to you.

We combine independence, so we can negotiate the best prices, with excellent technology, to find the best value products and services.

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What type of life insurance do you need? 

There are a number of different types of life insurance so it’s important to consider what’s right for you. 

 

1

Level term insurance

Pays a fixed amount if you die during the term of the cover. Both the sum insured and your monthly payments remain the same, so your family will know exactly how much they will receive and premiums won’t rise due to inflation. 

2

Joint life insurance 

Covers two people, but will only pay out once. Depending on the policy, it will either pay out when the first person dies, or when both policyholders have died.  

3

Single life insurance 

Covers one person. Some couples take out two single policies so that their beneficiaries get two payouts. These policies are usually more expensive as a result.

4

Decreasing term insurance 

Decreases over time, with the amount of cover usually reducing in line with your mortgage repayments. It is often a cheaper option, but you’ll need to consider whether the payout is sufficient to support your dependants.

5

Over 50s life insurance 

For anyone aged over 50. The advantage of over 50s life cover is acceptance is guaranteed so you don’t have to answer any health questions or pass any medical test.

6

Critical illness cover 

Pays out a tax-free lump sum if you are diagnosed with a serious illness during the term of your policy. It can provide financial support if you had to stop working. 

How does coronavirus affect my life insurance policy?

Depending on who you are and your medical history, coronavirus does have an effect on the price and availability of life insurance. Life insurance is very much still available, however, and you can find out more about how coronavirus affects life insurance at our FAQ.

How much does life insurance cost?

The average monthly cost of life insurance is £15.85*, according to MoneySuperMarket data.

The cost of life insurance can depend on the type of cover you choose (single or joint life insurance) and the term of the policy (level or decreasing term).

Your monthly payments will also depend on the amount of cover you take out and your health and lifestyle.

*51% of customers who went on to purchase achieved a quote based on the figures above for level term, life-only (without critical illness cover) single person policies. MoneySuperMarket data July 2019 to June 2020.

*The average cost above is based on a level term, life-only (without critical illness cover) single person policy. MoneySuperMarket data April 2019 to March 2020.

How much life insurance do you need?

The amount of life insurance you take out should ideally be enough to cover your mortgage repayments and the needs of your family if you were no longer around.

The average cover amount that consumers purchasing individual life insurance policies take out is £150,000, according to MoneySuperMarket data collected between July 2019 and June 2020. The average cover amount for joint life insurance was £200,000 during the same period.

When should you get life insurance?

It’s worth thinking about life insurance if you have a partner or child who relies on you financially, and they would struggle to pay the mortgage, rent or other bills if you were no longer around. 

Do you need life insurance to take out a mortgage?

Life insurance isn’t a legal requirement, but most mortgage lenders will ask you to take out appropriate cover. You don’t need to take out life cover from your lender – you can buy it elsewhere.

What does it mean to put a life insurance policy in trust?

Putting your life insurance policy in trust lets you name the people you want to receive your life insurance payout (your trustees).

There are different types of trusts available depending on your individual or family circumstances.

Putting your life insurance policy in trust also protects the payout from inheritance tax. 

When should you update your life insurance policy?

It can be a good idea to think about updating your life insurance policy if:

  • Your health or lifestyle has changed

  • Your financial situation has changed (your salary or mortgage might have increased)

  • Your family has grown 

  • Your relationship with your dependant has changed – although you will need to check your insurer can do this for you

If you are not able to update your existing policy, you may be able to find a policy with a different provider that better suits your new situation. It’s always a good idea to get a personalised quote to see if your current insurance is the best option that’s available to you.

Can you get life insurance if you have a pre-existing medical condition?

If you have a pre-existing medical condition you should still be able to get life insurance, but you may need to compare your options online. 

If you have a more complex condition and you’re finding it difficult to get a price online, a broker or adviser – such as our partner LifeSearch - can help you find a provider that will cover you.

You’ll most likely need to share additional medical information and copies of any tests with the provider to help them understand the risk level of your condition. You’ll be asked to sign a medical release form and the insurer will then request this information from your doctor.

You can end up paying more because of this risk. But it’s important to declare any pre-existing medical conditions when taking out life insurance because if you don’t, your insurer can refuse to pay out for any claims. 

What happens to your life insurance policy if you can’t meet your payments?

If you are not able to work because of an illness or injury – which then means you’re unable to afford your monthly life insurance payments – a waiver of premium could mean you’ll be covered during this time.

This will need to be added to your policy as an additional level of cover and it will need to be taken out from the start of your life insurance policy.

Can you claim on your own life insurance policy for a terminal illness?

If you’ve been diagnosed with a terminal illness and a doctor has given a prognosis of less than 12 months to live, you may be able to make a terminal illness claim on your own life insurance policy.

This means you would receive the payout now – instead of your dependant receiving the payout once you’ve passed away – and this can help to cover the cost of not being able to work during your final months and getting your affairs in order.

Some insurers offer terminal illness cover as part of their standard life insurance policy. Other insurers require you to add terminal illness cover as an extra level of cover. There will be terms and conditions with both options so you’ll need to read the policy documents to make sure you would be covered.

How are policy premiums calculated?

Insurers use a complex analysis of your age, lifestyle, medical history and living situation to calculate your premiums. You can find out more with our life insurance calculator.

How long should I get life insurance for?

Most life insurance policies run for a set period of time, for a period of at least five or ten years to – usually – 25 years. If you have special requirements, you can discuss them with your chosen insurer, but it’s worth bearing in mind that the younger you start your policy, the less you’ll have to pay.

Am I already covered by my employer’s life insurance?

Some employers offer what’s known as a death-in-service benefit to their employees, which will typically pay a lump sum of four times your salary to a named dependent. This type of policy is not a legal requirement, however, and it’s best seen as a complement to a life insurance policy, rather than a substitute.

Can I cancel my policy if I no longer need it?

You can always cancel your life insurance policy at any time you wish, but the vast majority of policies do not give you money back if you cancel before the end of the term.

You might want to cancel a policy because you’ve found cheaper cover elsewhere, or you might simply not want to keep paying your premiums.

Can I have multiple life insurance policies at the same time?

You are legally allowed to take out more than one life insurance policy at a time. For instance, if you have a mortgage you may have to take out a separate policy to make sure your dependents can keep making payments.

Insurers probably won’t let you take out an infinite amount of cover, however.

Is life insurance taxable?

Life insurance payouts are subject to inheritance tax just like the rest of your estate. If your total estate is worth less than £325,000 (or £650,000 if you are married and leaving it all to your spouse), then your dependents won’t have to pay a penny in tax.

However, if your estate plus your life insurance policy are worth more than that in total, inheritance tax will be due on anything above that threshold at 40%. This means that if you leave a total of £400,000, the first £325,000 is tax free. The rest – £75,000 – will be taxed at 40%, leaving £45,000.

Your family can avoid paying inheritance tax on your life insurance if you write your policy in trust.

Do I get my money back if I don’t die by the end of the policy term?

No. If you are still alive at the end of your life insurance policy term, the money is gone.

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