What are the types of term life insurance?
Post Office offers three types of term life insurance.
What is term life insurance?
There are two main types of life insurance: term life and whole life. Here, we're looking at what term life insurance is, what it's used for, and whether it's the right policy for you.
The 'term' of 'term insurance' refers to the time the policy runs for. This is determined by you and your insurer when the policy is taken out. It's also known as a policy's 'lifetime'.
The term can be longer or shorter depending on what you want your cover amount to go towards. There will always be a maximum possible length, which can vary by insurer.
These policies are designed to pay out if you die during their lifetimes. But, if you die after the term ends, your provider won’t pay out.
The advantage of term life over whole life – which insures you for however long you live – is its premiums are usually cheaper. Plus, there are different types of term policies designed to suit different wishes.
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Decreasing term life cover
Decreasing term life cover is designed to pay off an outstanding debt like a repayment mortgage. The cover amount reduces over time as your debt does, so those left behind can clear it if you die.
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Level term life cover
With level term life insurance, you choose a fixed payout amount your loved ones will receive if you die during the policy term. This can help pay off debts, leave a legacy or support your family with various financial needs.
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Increasing term life cover
Increasing term life cover is designed to keep pace with inflation, reducing the impact of increasing living costs on the cover amount you leave for loved ones. The amount increases each year in line with the retail price index, up to a maximum of 10%.
Term life insurance vs whole life insurance
Thinking about how long we might live isn’t easy, but it’s an important part of planning for the future.
As we age, the likelihood of living another 50 years naturally decreases. That’s one reason why term life insurance is typically more affordable than whole of life insurance for the same level of cover.
With term life insurance, you’re covered for a specific period, for example, 10, 20, or 30 years, and you only pay premiums during that term. If you pass away during the term, the policy pays out. If not, the cover ends.
In contrast, whole of life insurance has no end date. It guarantees a payout whenever you die, as long as you keep paying the premiums, which is why it usually costs more.
In short, term life insurance is generally more affordable because the cover is limited to a set timeframe.
Do I need term life insurance?
If you’re considering life insurance, you’re likely thinking about how your family would manage financially if you weren’t around. Estimating the income gap this might leave can help you determine the cover needed to meet their financial obligations.
Even if everything seems stable, reviewing your finances is wise. The money you leave behind can help your family make important decisions, like whether they can stay in their home or school.
To see if they’d be financially secure:
- Estimate the income loss they would face without you
- Work out your potential legacy, including savings, investments and valuables
- Check if your job offers a death in service benefit and how much it is
Next, compare this total with your financial responsibilities:
- Costs for housing, like mortgage or rent
- Everyday expenses, like food and utilities
- Other costs, such as car expenses (insurance, tax, fuel)
Even if you’re doing well financially now, your family might find it hard to manage without your income. If that’s the case, thinking about life insurance could be a smart choice.
Term life cover, critical illness and terminal illness
Different insurance companies cover critical and terminal illnesses in their own ways. Here’s how we cover them at Post Office:
- Terminal illness cover: Included in all life insurance policies, providing support if you’re diagnosed with a terminal illness
- Critical illness and children’s cover: Available as add-ons for an extra cost, helping if you or an insured child faces a serious illness that meets our definitions
Each company has its own list of what counts as a critical illness, so check the terms and conditions for details.
What does a term life insurance quote consider?
When you apply for term life insurance, several key factors help determine your risk level and how likely it is a claim will be made during the policy term. Here are the key factors.
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Your age
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Your lifestyle, including if you’re a smoker
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Any pre-existing medical conditions
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Your health
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You and your family’s medical history
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Your job
Smokers typically pay higher rates than non-smokers. Pre-existing medical conditions may impact your cover options. And ‘standard terms’ policies might not cover certain jobs (eg high-risk professions such as soldier).
If you only need term life insurance to cover a debt like your mortgage, you might not want a policy that pays out a large lump sum. Think about how much time is left on the debt and the interest rate.
Use our calculator to work out how much life cover you need.
Get life cover and an offer of your choice by getting a quote online or by phone
When you buy Post Office Life Insurance, you’ll also get a special reward. Choose a gift card from a choice of retailers or an unforgettable experience by getting a quote online or by phoning 0330 123 3921^.
Quote ‘TREATS’ when applying by phone for the experience offer.
Gift card offer
As a thanks for getting cover with us, select a £100 gift card† from one of these top retailers
- Choose a Tesco, M&S or Amazon.co.uk Gift Card*
- Flexible and easy to use for everyday shopping
- Perfect for shopping, home essentials, or treating yourself
† Qualifying period, minimum premiums and terms and conditions apply
Experience offer
Prefer experiences? Choose one around the UK worth £200†† to celebrate putting peace of mind in place
- Choose a Luxury Night Away or a Family Adventure Day
- Hundreds of experiences available nationwide
- A great way to celebrate peace of mind with a well-deserved break
†† Qualifying period, minimum premiums and terms and conditions apply
Post Office life cover options
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Life Insurance
Choose between level, decreasing or increasing term insurance, each designed to offer you peace of mind based on your circumstances.
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Over 50s Life Cover
If you're aged between 50 and 80, we could help you leave a cash sum for your family or towards your funeral costs.
Important information
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About our life insurance
Post Office Life Insurance is underwritten and administered by Scottish Friendly Assurance Society Limited. Neilson Financial Services Limited assist in the administration. If you buy Post Office Life Insurance over the telephone or online via the Post Office website, it is arranged and sold by Neilson Financial Services Limited, following an introduction by Post Office Limited. If you buy Post Office Life Insurance online via a price comparison website, it is arranged and sold by the firm that provides the price comparison website services.
Post Office Limited is an appointed representative of Post Office Management Services Limited which is authorised and regulated by the Financial Conduct Authority, FRN 630318. Registered in England and Wales. Registered numbers 2154540 and 08459718 respectively. Registered office: 100 Wood Street, London, EC2V 7ER.
Offer terms and conditions
† Gift card offer ends 31 December 2025. Minimum premiums and 180-day qualifying period applies.
†† Experience offer ends 31 December 2025. Minimum premiums and 180-day qualifying period applies.
* Restrictions apply, see amazon.co.uk/gc-legal
Things you need to know
Post Office Life Insurance is for customers who are UK residents aged 18-70 at the start of the policy. The minimum term is 5 years and cover must end before your 90th birthday.
We won’t pay a claim if you don’t keep your payments up to date as you will no longer be covered under the policy. If you don’t tell us something or give us incorrect answers to our application questions that affects your cover, we may reduce the amount we pay for a claim or at worst cancel your cover and not refund your monthly payments.
Footnote
^ Opening Hours: Monday to Friday: 9am - 8pm, Saturday: 9am - 5pm, closed on Sundays and bank holidays. Call charges: Calls to 03 numbers will cost no more than calling a standard UK number starting with 01 or 02 from your fixed line or mobile and may be included in your call package. Calls may be monitored or recorded for training and compliance purposes.