What is family life insurance?
Key takeaways
Family life insurance is any life insurance policy that helps support your loved ones financially after your death
Family life insurance can cover mortgages, debts, daily living costs, and specific responsibilities like school fees
To determine cover amount, consider housing costs, outstanding debts, daily living expenses, and funeral expenses
What is family life insurance?
Family life insurance doesn’t refer to a specific product, but any life insurance policy that can serve as a way to help your loved ones once you’re gone.
The payout from these policies can cover anything from mortgages and debts to daily living costs or specific responsibilities such as school fees.
Essentially, family life insurance is a financial safety net that can alleviate the economic impact of a policyholder's death on their family.
Did you know...
An estimated 46,300 dependent children (aged 0-17) are bereaved of a parent each year. That’s 127 children newly bereaved each day.
How does life insurance work?
Upon the policyholder's death beneficiaries receive a payout, which can be used for various purposes:
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. The amount beneficiaries receive may remain constant or decrease over time.
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 that it can be more expensive than other types, plus payouts may not be 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 mortgage 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
Who needs family life insurance?
Family life insurance is beneficial for anyone who wishes to provide financial support to their loved ones after they're gone. It's particularly suited to:
Young families and new parents who can secure lower premiums due to their age
Single parents who are the sole financial providers for their children
Homeowners who need to cover mortgage repayments and prevent passing on debt
Should I get a single or joint family life insurance policy?
A joint policy can be a more cost-effective option for couples, but it will only pay out once, even if you both die.
Single life insurance policies offer individual cover so you don't need to worry about changing them in the event of a separation.
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 life insurance policy?
Finding the right life insurance policy at a competitive rate is easier 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.
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
Katie Bishop
Insurance writer
Katie Bishop is an author and journalist with a decade of writing and editing experience. She has previously worked as an economics editor at Oxford University Press, and her business and finance...
