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The nation's relationship with life insurance

For many people, life insurance is an extremely important financial product - but how many of us have it, and what do consumers actually know about this type of cover?

Posted: 5/11/2022 | By Gulay Yildirim

street scene featuring stages of life

Attitudes to life insurance in the UK

Life insurance can undoubtedly be a very important type of financial protection, but how many people in the UK have it and, as a nation, what do we know about these policies? Keep reading to find out, and to test your knowledge in our life insurance quiz. We also answer some of your top life insurance questions.

More than half of adults insured

We polled 2,000 adults across the UK to get the lowdown on the country’s relationship with life insurance. More than half of the people we surveyed (53%) said they have a life insurance policy in place. Men were slightly more likely than women to have this financial cover, with 56% of male respondents stating they had life insurance, compared to 51% of women.

In general, people seem to be satisfied with their policies. Over three-quarters (77%) of those with cover said that they were either happy or very happy with it.

Honesty is everything

But could some consumers be at risk of having their policies cancelled or claims refused due to dishonesty during the application process? It’s important to be aware that failing to provide an insurer with accurate information when applying for cover can result in these outcomes. Concerningly, 15% of people we polled reported being only partially truthful when making their applications and a further 6% revealed they had been untruthful. This compared with 79% who said they had been fully truthful when providing personal information to their insurer. Interestingly, women appeared to be more honest than men when it came to disclosing this information. Nearly 9 in 10 women (85%) reported being fully truthful, as opposed to less than three-quarters (72%) of men.

A family focus

Nearly two-fifths (39%) of people with life insurance in place said they took it out when they were aged 25 to 34. This is perhaps not surprising given that 75% of those with cover cited providing financially for their family as a main priority for getting a life insurance policy. With the average age of first-time mothers in England and Wales now 29 and the average age of first-time fathers 33 , it makes sense that it is common for people in this age bracket to take out life cover. Just over a fifth (22%) of those with life insurance took it out between the ages of 35 and 44, while 20% bought a policy aged 18 to 24. More than one tenth (12%) waited until they were between the ages of 45 and 54, while 7% delayed getting life insurance until they were 55 or older.

Among those who didn’t have life insurance in place, 32% said they lacked this protection because getting it was too expensive, while 28% said they believed they were too young for this type of cover. When asked which life events would encourage them to take out a policy, 36% said becoming financially wealthy would motivate them to do so, while 25% said starting a family and 19% said getting a mortgage.

Family protection was ranked as the most important factor when choosing life insurance, followed by the monthly or annual cost of the policy, mortgage value, the insurer and then the cover amount. In terms of how much people are willing to pay for this type of cover, 30% of respondents said they would be prepared to part with £15 to £20 a month, while 29% said their limit was £15. Nearly one in five respondents (19%) suggested they would pay £21 to £30 per month for a policy, 10% said their budget would stretch to £31 to £40 and 6% said they would shell out £41 to £50. The same percentage stated they would pay £51 or more each month to have this financial protection in place.

Getting the right cover for you

Our survey revealed that there is a lot of variation in the UK in terms of people’s approaches to life insurance and how much they know about it. By making sure you’re clued up when it comes to this type of financial cover, you can be confident you’re getting the right policy for you - giving you added peace of mind and helping to protect your loved ones’ finances when you’re no longer around.

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If you believe you need life cover, then consider a policy from the Post Office.

Take our life insurance quiz

Test your knowledge of life insurance by taking our quiz. In brackets after each option, we've included the percentage of our survey respondents who selected this answer.

  1. Which of the following would you expect a life insurance policy to cover?

    A. Critical illness (28%)

    B. Funeral costs (26%)

    C. Income protection (21%)

    D. Medical costs (22%)

    E. None of the above (3%)


    Answer - A & C are the correct answer. Critical Illness and Income Protection may be offered as an add on to a Life Insurance policy, these tend to be at additional cost. Life insurance policies provide a lump sum on death. The payout can be used for any purpose that you or your beneficiaries choose, including covering funeral and medical costs.

  1. Below are some statements about life insurance. Please read each statement carefully and pick the one that best describes your understanding of how a life insurance policy works.

    A. Money is paid to an insurer, usually each month for a certain length of time, and upon death any beneficiaries will receive a payout. (55%)

    B. A premium is paid to the insurance provider, usually in monthly intervals, for the duration of the policy. Money can be withdrawn at any point to cover life events. (20%)

    C. You pay an insurer a monthly fixed payment subject to your level of health. (15%)

    D. I don't know (10%)


    Answer - The correct answer is A. You pay money to an insurer, usually each month. Then when you die, your insurer pays out to your beneficiaries.

  1. To your understanding, choose one or more statements that best describe how the payout of a life insurance policy to your beneficiaries works.

    A. Beneficiaries will receive the policy lump sum upon the insured passing. (43%)

    B. Beneficiaries can choose to receive a series of payments. (24%)

    C. Beneficiaries can choose to put the funds in an interest-earning account. (14%)

    D. I don't know (19%)


    Answer - A is correct. The legal beneficiary will receive the relevant lump sum payment and can choose how to spend it, which may include settling the policy holder’s estate, paying towards their funeral, paying off the mortgage or providing financial security for those left behind.

  1. To your understanding, can you get life insurance if you have a pre-existing medical condition?

    A. No, it will be impossible to get a life insurance policy with a pre-existing condition. You are required to have a satisfactory health report. (12%)

    B. You may be able to get life insurance with a pre-existing condition, but it will cost more and take longer to be accepted. (61%)

    C. Yes, you will be able to get life insurance like any other person with no differences at all. Insurance providers are not allowed to ask about your health. (13%)

    D. I don't know (14%)


    Answer - The correct answer is B. It may be possible to get life cover if you have a pre-existing medical condition. However, it could be more expensive and you might find that your application is not accepted instantly. Another possibility is that you will be accepted, but the pre-existing condition will be excluded from the policy (in other words, death or serious illness related to that medical condition will not receive a payout).

  1. Choose the statement that best describes the difference between life insurance and life assurance.

    A. Life insurance covers you for a specific term or amount of time, whereas life assurance aims to cover the policyholder for your entire life. (36%)

    B. Life assurance covers you for a specific term or amount of time, whereas life insurance aims to cover the policyholder for your entire life. (38%)

    C. Life insurance and life assurance are both the same. They cover you for a specific term or amount of time. (26%)


    Answer - The correct answer is A. Life insurance covers you for a certain length of time or a specific term, for example the duration of your mortgage. You will only pay a premium during this term and only be covered if you die during this term. In contrast, life assurance usually covers you for your entire life.

doctors discussing a patient's health

Common life insurance questions

  • Yes, it is possible to get life insurance with a pre-existing health condition. This is just one of many factors that cover providers take into account when you apply for a policy. However, you should be aware that if you apply for life insurance for diabetics, life insurance with cancer or cover with another health condition, you might have to pay more and your application may not be accepted instantly. The cover provider might ask for further medical information, such as a report from your GP or a health screening. In some cases, cover providers may exclude the pre-existing conditions from the policy. This means that if you pass away from the pre-existing condition, the insurer will not pay out.

  • Life insurance policies provide a lump sum on death. The payout can be used for any purpose that you or your beneficiaries choose, including covering funeral costs. Our Over 50s Life Cover gives you the option to add a funeral benefit to your policy at no extra cost, meaning that depending on the type of funeral plan you choose, you will be eligible for a discount towards the final cost of the funeral.
  • Life insurance payouts are not directly taxable. However, if an insurance payout is part of your estate, it may affect the inheritance tax (IHT) that your family pays. The current IHT threshold is £325,000 . To prevent your insurance payout from being subject to IHT, you can write your policy ‘in trust’. This means that the insurance payout will go directly to your chosen beneficiaries without ever becoming part of your estate, and it will therefore not be taxed. If you think writing a policy in trust may be a good option for you, it is recommended to take financial advice to ensure you find a solution that best suits your circumstances.
  • Life insurance is a type of financial protection that pays out if you pass away during the term of the policy. There are different types of life insurance that work in different ways. Level cover can be used to provide for your loved ones after you die and/or to pay off an interest-only mortgage after you pass away. You pay a fixed premium each month and the sum paid out if you die will be the same regardless of whether the claim is made now or in the future.

    Increasing cover is intended to reduce the impact of inflation on the money you leave your beneficiaries if you pass away. Your premiums will increase annually, and the longer you have the policy in place for, the higher the payout will be.

    Decreasing cover is typically used to pay off a mortgage if you die. You pay a fixed premium each month (which is typically less than you would pay for level cover) and the payout amount drops each month in line with the amount you still owe on your mortgage.

a couple embrace while discussing life insurance details
  • Life insurance for over 50s works differently to other life insurance policies. There are no medical questions when you apply, and it will pay out a fixed sum to your loved ones when you pass away. As long as you make your repayments, this cover will last for life. Unlike term insurance, where cover runs for a set time period, it isn’t designed to meet big financial targets like paying off a mortgage. Instead, it allows you to leave money that might be used by your family for purposes such as paying for your funeral, settling unpaid bills or leaving a small legacy for loved ones like grandchildren.

  • The type of life insurance you need to cover a mortgage will depend on what sort of mortgage you have. Level cover policies are often used to pay off interest-only mortgages. As long as you have this cover in place, it will pay off your mortgage debt if you pass away. Alternatively, if you have a repayment mortgage, you may want to consider taking out decreasing life insurance. This type of cover protects your loved ones from debts that decrease over time, such as repayment mortgages. It's important to compare different life insurance policy types.

  • Life insurance pays out a sum to your chosen beneficiaries if you pass away during the specified term of the policy. This term may be the time it takes you to pay your mortgage off, for example. Once the term is up, you stop paying a premium and you are no longer covered. In contrast, life assurance pays out to your beneficiaries when you die, whenever this may be. There is no fixed term.

    The type of policy that will suit you best depends on your specific needs. For example, if you want to ensure that your mortgage is paid off in the event of your death, a life insurance policy could be best for you. On the other hand, if you want to make sure your loved ones get a lump sum whenever you pass away, whether or not your debts are already paid off, life assurance may be more suitable.

    Looking for the right life insurance policy? Get a quote from us today. 

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