Life insurance

A life insurance policy runs for a set number of years, called the term, and pays out if you die during that time. You choose how much cover you want and how long it lasts, often to match your mortgage.

It can pay a lump sum or, with family income benefit, a monthly income, usually up to the age you would have retired. Most policies also pay out early if you're diagnosed with a terminal illness.

You can usually cancel within 30 days of the policy starting and get a full refund.

Life insurance is usually worth considering if:

• someone relies on your income, such as children or a partner
• you have a joint mortgage, or debts someone else would have to pay

You may not need it, or may need less, if:

• you're single and nobody depends on your income
• your partner earns enough for your family to live on
• you have savings or cover through work that would be enough

• We work out with you what the cover needs to do, and how much might be enough.
• We compare life insurance from the insurers we use, including how they define terminal illness, their options and their prices.
• We recommend a policy in writing and explain what it won't cover.
• We help with the application and explain the insurer's trust forms.
• We can review your cover when your mortgage or family changes.

We offer products from a carefully selected number of insurers to provide a fair analysis of the market for Income Protection, Critical Illness Insurance, and Life Assurance.

We don't charge you a fee for protection advice. If you take out a policy through us, we're paid commission by the insurer.

As with all insurance policies, conditions and exclusions will apply.

The cost of this insurance depends on several factors, such as your age, where you live and your occupation. As a result, the cost you will pay is based on your own circumstances.

Thinking about serious illness too? See critical illness cover and life and critical illness cover.

Level cover. The amount stays the same for the whole term. It's often used to protect your family's income, or an interest-only mortgage, where the whole loan is still owed at the end.

Decreasing cover (often called mortgage life insurance). The amount goes down over the term, roughly in line with what you owe on a repayment mortgage. If your mortgage interest rate ends up higher than the rate the policy assumes, or your mortgage changes (for example, you borrow more or take longer to repay), the payout might not clear the mortgage in full.

Increasing cover. The amount goes up each year, usually in line with inflation, so it keeps its value. Your payments go up each year too, by more than the cover does. If you turn down the increases a few times in a row, the option usually ends.

Family income benefit. Instead of a lump sum, it pays a monthly income from the claim until the policy ends, usually up to the age you would have retired. So the later a claim is made, the less is paid in total. You can usually take a lump sum instead, but it will be less than the monthly payments added together.

Single or joint cover. A joint policy covers two people but pays out only once, when the first person dies, and then ends. Two single policies pay out for each person. A joint policy usually costs less than two single policies. Some insurers offer one plan that covers two people separately, which works like two single policies.

There's no reliable rule of thumb based on salary. A practical way to work it out is to add up:

• your mortgage and any other debts you'd want paid off
• what your household would need each month to live on once those debts are paid, minus what a partner earns
• for how many years, for example until your youngest child is independent
• then take away any cover you already have, including through work

• It pays nothing if you're alive at the end of the term, and you can't cash it in.
• Most policies won't pay for suicide or deliberate self-injury in the first 12 months.
• If you don't answer the application questions accurately and fully, a claim may be reduced or refused.
• If you miss payments, your cover can stop, often after 30 to 60 days.
• Decreasing cover may not pay off your mortgage if your mortgage rate is higher than the policy's rate, or your mortgage changes.
• Level cover doesn't go up with inflation, so it's worth less over time.
• A joint policy pays out only once.
• Terminal illness cover pays only if the insurer's strict definition is met.

Insurers set the price, called the premium, from your age, health, smoking, weight, family medical history, job and hobbies, as well as how much cover you want, for how long, and any extras. It's generally cheaper the younger and healthier you are.

Vaping, and nicotine patches or gum, usually count as smoking. You're normally treated as a non-smoker only if you haven't used any of them in the last 12 months.

Guaranteed or reviewable premiums. Guaranteed premiums stay the same unless you change the policy. Reviewable premiums can be changed at set reviews, usually every five years, so they can go up or down. Among the insurers we use, life-only cover is generally offered with guaranteed premiums.

We don't publish example prices: what you'd pay depends on the insurer's assessment of you.

A trust is a legal arrangement where people you choose (trustees) hold the policy and pass the money on to the people you want to benefit. It can help with:

• Speed. Trustees can usually claim with the death certificate, without waiting for probate (the legal process of dealing with what you leave when you die).
• Control. You decide who gets the money. This matters if you live with a partner but aren't married: they don't have the same rights to what you leave as a husband, wife or civil partner.

Putting a policy in trust usually can't be undone. We'll usually recommend putting your life cover in trust, and we'll help you with the insurer's trust form. If you're unsure about any of the implications, we'll suggest you speak to a financial adviser or a tax adviser.

The Financial Conduct Authority does not regulate trust or tax advice.

Life cover through work (death-in-service) is often a multiple of your salary; your scheme booklet says how much. It usually stops if you leave that job.

Bereavement Support Payment may be paid to your husband, wife or civil partner, or a partner you lived with and had children with, if they're under State Pension age and you paid enough National Insurance. It's £3,500 plus £350 a month for 18 months if they have children or are pregnant, or £2,500 plus £100 a month otherwise. They need to claim within 3 months to get the full amount.