Life insurance is a financial product that pays out a lump sum to your loved ones if you pass away during the policy term. In the UK, it’s designed to provide peace of mind by helping cover mortgage payments, household bills, or other financial commitments.

Life insurance works by paying regular premiums to an insurance provider in exchange for financial protection. If you die during the policy term, the insurer pays a tax-free lump sum to your chosen beneficiaries. This money can help cover debts like a mortgage, replace lost income, or support your family financially. There are different types of policies, including term life insurance (covering a set period) and whole-of-life insurance (which covers you indefinitely).

Life insurance typically covers:

• Death - a lump sum is paid to your beneficiaries if you pass away during the policy term.
• Terminal illness (often included at no extra cost) - pays out early if you’re diagnosed with a terminal illness and given less than 12 months to live.
• Debt repayments - such as a mortgage, credit cards, or loans.
• Living expenses - helping your family maintain their lifestyle.
• Funeral costs - providing support with final expenses. Optional add-ons (for an extra cost) can include critical illness cover, but this isn’t standard in basic life insurance policies.

When getting life insurance in the UK, consider the following costs:

• Monthly premiums - your regular payments, based on age, health, lifestyle, and cover amount.
• Policy type - term life insurance is usually cheaper than whole-of-life cover.
• Level of cover - higher payouts mean higher premiums.
• Optional extras - adding critical illness cover, index linking, or joint cover increases the cost.
• Medical history and lifestyle - smokers or those with health conditions often pay more.
• Policy term - longer terms typically cost more overall. It’s wise to compare quotes and review regularly to ensure you’re getting value as your circumstances change.