What are the different types of life insurance?
Life insurance pays out a sum of money to your loved ones if you die. There are lots of policies to choose from, from those which just cover your mortgage payments, for example, to those which pay out a sum of money no matter when you die. In this guide, we’ll outline the different types of life insurance available along with the benefits of each to help you decide which one is right for you.
Key takeaways
There are different types of life insurance to choose from, depending on your personal circumstances
Term life insurance offers peace of mind if you have financial obligations such as raising a family or paying off a mortgage
While MoneySuperMarket does not offer whole of life insurance, it provides deals on over 50s life insurance, level term and decreasing term policies

What are the main types of life insurance?
There are various life insurance policies to choose from, including:
Level-term life insurance pays out a set amount of money if you die while the policy is in place. It is often called family life insurance.
The payout remains constant throughout the policy's duration, as do the premiums. Typically the younger and healthier you are when you take out the policy, the lower your premiums will be.
The predictability of the payout is a significant advantage of this type of policy. The downside is that this insurance can be more expensive than other types, and payouts may not be adjusted for inflation.
Term life insurance is a policy with a set expiration date. It's designed to cover specific periods when financial obligations are at their peak, such as while raising a family or paying off a mortgage.
For example, you could get a term life insurance policy that cover a period of 15 or 20 years while your children are minors, so that if you die within this period the policy will pay out a sum of money that can be used to take care of them in your absence.
Decreasing term life insurance is also known as mortgage life insurance. Its payout decreases over time in line with your mortgage balance.
Premiums are generally cheaper than for level-term policies, but its not suitable for all mortgage types.
Increasing term life insurance accounts for inflation, with the payout increasing annually.
This means higher payouts, but also makes it more expensive than level or decreasing term insurance.
Joint life insurance covers both halves of a couple but only pays out after the first death. It can be more affordable than two separate policies if you and your partner are considered low risk by insurers.
However, you will need to alter the policy if you and your partner split up or get divorced.
Whole of life insurance, also referred to as life assurance, offers lifelong cover and guarantees a payout regardless of when you pass away, as long as you have consistently paid your premiums.
It is almost always more expensive than term policies. There are different types of whole of life insurance, including:
balanced cover, which has fixed premiums
maximum cover, which has variable premiums based on investment performance
Over-50s life insurance policies is geared towards older individuals who are likely to be charged very high premiums if they take out standard life insurance.
It offers a guaranteed payout regardless of when you die (as long as you consistently pay your premiums) and also guaranteed acceptance without medical exams. It is therefore suitable for people with pre-existing health conditions.
There is a risk with these types of policies that the amount it pays out may be less than you paid in.
Level term (family) life insurance
Term life insurance
Decreasing term (mortgage) life insurance
Increasing term life insurance
Joint life insurance
Whole of life
Over 50s life insurance
How to choose the right insurance
When thinking about the right type of life insurance for you and your loved ones, the following points are worth considering:
Your budget
The amount of overall cover you would like
Your financial outgoings, and how much these would be without your income
Any other assets you own, such as other property or investments
How long you would like cover for
Did you know...
An estimated 26,900 parents die each year in the UK leaving dependent children; that’s one parent every 20 minutes, click here for more information.
Critical illness cover
Critical illness cover is an additional layer of protection that pays out upon diagnosis of a severe medical condition. You can choose between a combined policy, which pays out once for either critical illness or death, or an additional policy that allows for two separate payouts.
Comparing life insurance quotes
Finding the right life insurance policy can be simplified by using comparison services like MoneySuperMarket, which provide tailored quotes from a range of UK providers. This tool can help you navigate the complex landscape of life insurance and select a policy that meets your specific needs.
If you're contemplating life insurance, remember that the type of policy you select will have a significant impact on your coverage. It's crucial to understand your options before making a decision.
Whether you're considering term life insurance to protect your family during your working years, or an over-50s policy for peace of mind in later life, make sure to calculate how much cover you need to ensure your loved ones are adequately provided for.
Life insurance is not just a financial product; it's a commitment to the well-being of those you cherish most. Take the time to choose wisely, and rest assured that your legacy will be a secure foundation for your family's future.