How to check life insurance coverage: Get one of the best coverage and worth

It’s a good idea to compare life insurance quotes to make sure you’re getting a good price and the best policy for your situation.

Life insurance is a valuable but under-bought cover. You should think about taking out a life insurance policy if you’ve got children, other dependants or a joint mortgage. It can clear your mortgage if you die and provide money to help your family survive without you.

But nobody likes to think about dying, which helps to explain why 46 per cent of those aged 55 and over said they’d never requested a quote for life insurance, according to a 2024 MoneySuperMarket survey.

Life insurance isn’t a pleasant purchase to think about, but it could end up being the most important financial product you ever buy because of the protection it offers.

Here we explain how life insurance works, plus how to get the best life insurance policy at the cheapest price.

What is life insurance? 

It comes in different shapes and sizes, but life insurance works by providing a payout to dependants if you die. Some policies provide cover until you die, while others offer protection for a set length of time, such as the duration of a mortgage.

The cost each month depends on factors like:

• your health
• personal circumstances
• level of cover
• the type of policy you choose

Generally, those who own a mortgaged property with a partner, especially if they have children, should at least get life cover with the aim of clearing their home loan if they die.

This means the surviving partner and any children can remain in the house and won’t have to worry about paying the mortgage on a reduced household income.

Many people also decide they want their loved ones to be better catered for than simply having the mortgage paid off and take out policies that provide more protection.

There are different types of life cover:

Level term insurance

Level term insurance pays out an agreed lump sum if you die within a set time frame.

You can take it out in conjunction with your mortgage term or planned working life, for example. It will pay out the set amount if you die during that period.

Decreasing term insurance

This also pays out a lump sum, but the amount declines over the length of the agreement.

You could take this out with a repayment mortgage, reflecting the fact that the outstanding debt will fall over time.

It’s cheaper than level term insurance.

Whole of life insurance

This type of policy lasts for the rest of your life. The insurance pays out a set sum whenever you die.

Policies are usually made up of an insurance element and an investment element. This is often used to cover an expected inheritance tax bill.

Whole of life insurance is the most expensive form of life insurance.

How do you buy life insurance?

There are different ways to buy life insurance. You can purchase it online through a price comparison website, direct from a provider, or through a qualified financial adviser.

There are several things to think about when buying life cover including:

• finding the best price (although cheapest won’t always be the right choice)
• what the right level of cover is for you
• what arrangements you may already have through work

Life insurance policies can be joint or individual. It’s worth comparing costs for both, because separate policies can work out better and cheaper for a couple – or only slightly more expensive. And if something terrible happens and you both die, they will both pay out.

In contrast, a joint policy will typically only deliver one payout on the first person’s death.

Guaranteed vs reviewable life insurance premiums 

If you take out a policy with guaranteed premiums, the price of your policy will stay the same over the term.

Otherwise, you’re looking at a policy with reviewable premiums, which means the insurer can change the price – both up and down. Policies with reviewable premiums can be cheaper. But be wary of ‘low-start’ policies that start with low premiums that rise over time, because these can end up being more expensive over the duration of the policy.

Reviewable premiums will only be set for a certain term and will most likely increase on a date in the future when they’re reviewed.

What does it mean to write a life insurance policy in trust?

If you write a life insurance policy in trust, it falls outside of your estate, won’t deliver an inheritance tax bill, and will be paid directly to the person you specify it should go to without the need to wait for probate.

It sounds complicated, but it’s fairly straightforward and usually involves just filling in a form. Providers or advisers can help you do this.

How much life insurance do you need?

You’ll probably want your life insurance payout to cover any remaining mortgage, pay for a funeral and leave some money to help with living expenses – but the more cover you take out, the pricier it will be.

If you’re on a capital repayment mortgage and simply want to cover that, decreasing term life insurance may be best. The payouts on these types of policies can reduce over time as the balance of your outstanding mortgage falls, resulting in lower premiums.

It should ensure your mortgage is repaid when you die and is likely to be the most cost-effective option.

Even though it’s more expensive, some people may choose to take out level term life insurance until a certain age anyway. For example, until their children are old enough to leave school or university – or even to protect their family if they die younger than average.

Keep in mind that if you’re on an interest-only mortgage, your debt isn’t steadily being repaid. Here you might want to consider a level term life insurance policy, so it pays out a fixed lump sum that can clear the outstanding capital balance when you die.

If you think you’ll end up moving to a more expensive property, it may be worth buying extra life cover earlier on, because it tends to be cheaper the younger you are.

There’s also increasing term life insurance. Here the payout increases by a fixed amount each year, or in line with inflation. This type of insurance is designed to factor in rising living costs, but premiums will also rise as a result.

When taking out life cover, consider what arrangements you already have in place.

For example, employers can offer some form of death in service benefit, which may be a multiple of your salary. Pension pots built up can also be passed on to your family if you die.

Check with your employer and pension provider what benefits you have before assessing the level of cover that you need.

How much does life insurance cost?

Life insurance premiums are calculated depending on your history, health and age, among other factors. For example:

• A 40-year old non-smoker can expect to pay between £6.56 and £8.89 a month for £100,000 worth of cover over 25 years, depending on the insurer.
• A 40-year old smoker can expect to pay between £14.02 and £16.73 a month depending on the insurer, for the same cover. 

These figures are according to Cavendish Online in June 2025, based on its zero-commission model. 

Other circumstances such as marital status and credit score may also be used to calculate your premium.

The amount of cover a person needs will depend on their personal circumstances. Things such as outstanding loans, the number of dependants and how much would be needed to replace your income should all be taken into account, as well as how much you can afford to pay each month in premiums.

Should I get joint or separate life insurance?

One thing you and your partner will have to consider is whether you want to buy separate or joint life insurance.

Separate life insurance 

One of the most attractive things about having your own separate life insurance policy is that it remains unaffected if your relationship ends.

On top of this, if both you and your partner die, separate policies will result in two payments. Separate policies are more expensive, however.

Joint life insurance 

Joint life insurance is the cheaper option. There will most likely only ever be one payout in the event of either you or your partner’s death.

Depending on your policy terms, it will either pay out when one of you or both of you dies.

If you do take a joint policy, for young families, it’s probably best to make sure the policy will pay out when the first person dies. Some policies pay on second death, but these are primarily meant for inheritance tax planning.

The downside to taking a joint life policy is that if one partner dies, the policy pays out and then the remaining partner or parent must take out a new policy.

Depending on their age and circumstances, this could cost significantly more than having taken out two single policies at the outset. 

How to find life insurance by comparing quotes

For most simple life insurance needs, there isn’t a great deal of difference between policies.

However, it’s important to consider how insurers may underwrite people with specific medical conditions, so a good analysis of the market and the true price of the cover is vital for those without a completely clean bill of health.

You can buy life insurance over the phone, by comparing quotes online at a comparison website, or directly from a company.

You can also go to an independent financial adviser, who can work out how much your family is likely to need.

Life insurance usually pays commission to the broker or financial adviser involved – this adds to the cost of policies. There are ways to bring this down, however.

This is Money recommends life insurance comparison service Cavendish Online*, which charges a one-off £25 fee – but the commission paid to the broker goes back into the policy to make your payments cheaper.

You can choose this option if you go it alone for low-cost payments and run a comparison yourself. Alternatively, if you need help and are happy to pay more, you can choose to get guidance or full advice.

Critical illness and income protection cover 

There are other forms of insurance which can protect you and your family if catastrophe strikes.

For example, critical illness cover works in a similar way to life insurance, but instead pays out if you are diagnosed with a defined critical illness. This is sometimes available as a combined policy with term life insurance.

Income protection insurance can also help replace loss of earnings due to ill health, or accidental injury. The policy will pay out until you either start working again, retire, or die, or at the end of the policy term.