What is Life Insurance and Do You Need It?
A plain English guide to life insurance — what it covers, who needs it, and how to get the right amount.
Life insurance is one of the simplest but most important financial products available. In exchange for a monthly premium, your insurer agrees to pay a lump sum to your family if you die during the policy term.
Who needs life insurance?
If anyone depends on your income — a partner, children, or elderly parents — life insurance is worth considering. The main scenarios where it makes sense:
- You have a mortgage. A life insurance payout can clear the debt so your family keeps the home.
- You have children. Replacing your income ensures they maintain their standard of living.
- You are self-employed. You won't have death in service benefits through an employer.
How much cover do you need?
A common starting point is 10 times your annual salary, plus enough to clear your outstanding mortgage. Your adviser will help you calculate a more precise figure based on your actual outgoings and dependants.
Types of life insurance
Level term: Pays the same amount throughout the policy. Good for covering income replacement or a fixed debt.
Decreasing term: The payout reduces over time, tracking your mortgage balance. Usually cheaper than level term.
Whole of life: No expiry date — pays out whenever you die. Often used for inheritance tax planning.
How to get advice
Getting the right life insurance is straightforward when you work with a regulated adviser. They compare policies from across the market, explain the small print, and arrange everything for you — free of charge.