Our life insurance types guide helps you choose the best policy to keep your loved ones financially secure when you’re gone. Compare different options like term and whole of life cover, plus extra features such as critical illness cover.
There are different types of life insurance plans. Choosing the right policy for you will depend on your life stage, family situation and financial needs. To help you make your decision, think about the following:
Everyone’s needs are different. If you have a 20-year mortgage, a decreasing term policy may suit you best. Or, if you’re getting older and wish to leave a gift for your children or grandchildren, a whole of life policy, such as Over 50s Life Cover, may be more appropriate.
Here, we outline the different kinds of life insurance policies and what each one offers.
There are two main types of life insurance:
If you're looking for term life insurance, we offer three different options:
What is it for?
It pays out a cash lump sum to use as you or your loved ones see fit. This might be to pay bills or a mortgage if you have one.
Why might you need it?
Choose level cover for a policy that pays a fixed amount upon your passing, helping your loved ones with debts and maintaining their lifestyle.
How does it work?
What is it for?
It’s mainly used to pay off a mortgage and cover the costs of raising children if you pass away.
Why might you need it?
Decreasing cover is one of the best life insurance types if you have mortgages or loans. Matching your insurance payout to your decreasing costs enables you to protect your family from having to sell your home, but also benefit from lower monthly payments than level cover. Decreasing cover is about giving you the right amount of cover for the life stage you’re at.
How does it work?
Mortgage guarantee
The cover assumes that your mortgage rate is 8% or lower. If mortgage rates increase above this rate after you took out your policy, you will still be covered for the remaining mortgage balance, even if it is higher than the cover you initially took out.
What is it for?
It helps provide for your loved ones and protects the money you leave behind from losing value due to inflation.
Why might you need it?
As prices rise, increasing cover ensures the cash amount paid out if you die increases each year, helping your family manage living costs.
How does it work?
You can skip the annual increase if you prefer, meaning neither the cash payout nor the monthly premium will rise. If you skip this for three consecutive years your policy will switch to level cover and no further automatic increases will apply.
One way to understand the difference in what these types of term life cover would pay out is to see it. So here's an example showing how a payout amount worth £100,000 today would change over time.
Whole of life insurance covers you for the rest of your life. You pay into the policy and whenever you pass away, the insurer pays your loved ones, giving you peace of mind without needing to renew. While you can get it at any age, it usually makes most financial sense for those in their later years who want a guaranteed payout, as term life insurance becomes a lot more expensive as you get older. For this reason it’s commonly offered as ‘over 50s life cover’, or you may have heard it be called ‘life assurance’.
Payout limits are often much smaller for whole of life cover as the payout is assured. Like Post Office Over 50s Life Cover, provides up to £10,000 of cover, depending on age. Acceptance is guaranteed for UK residents aged 50-80.
Here are some other kinds of life insurance products that could be beneficial to you and your loved ones.
Joint life insurance
Joint life insurance protects you and your partner. It pays out if one of you dies, ensuring your family is taken care of. But remember, after a claim the surviving partner won’t be covered anymore and will need their own policy.
Post Office offers joint policies with one premium payment. These only pay out once.
Two single policies protect each policyholder separately but will mean paying two premiums each month.
Critical illness cover (at extra cost)
Critical illness cover pays a lump sum if you become seriously ill. This can help with expenses like medical bills or home modifications.
The payout can be a percentage or a set amount, depending on the insurer. If you make a claim for critical illness, that part of the cover will end but the main policy will continue.
This is usually an optional add-on when you take out a life insurance policy, so check what illnesses are included and for how long.
Children's cover (at extra cost)
Children’s cover pays out if an insured child becomes seriously ill, usually as a lump sum. This can help with expenses like taking time off work to care for them.
The payout can be a percentage or a set amount. If you make a children’s cover claim, that part of the cover will end but the main policy will continue.
This cover must be bought at the same time as the life insurance policy. Make sure you know what’s covered and for how long.
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^.
† Qualifying period, minimum premiums and terms and conditions apply
† Qualifying period, minimum premiums and terms and conditions apply
The type of life insurance you need will depend on your age, health, lifestyle, whether you have a mortgage, and whether you have dependents. Everyone’s situation is different. Consider how much cover you need (whether you need cover until you die or cover while you have a mortgage).
The main difference between term life and whole life is the policy period. Term life covers a specific period (you choose how long), while whole life gives you lifelong coverage and guarantees a payout to your loved ones whenever you die.
This depends on your personal circumstances. Whole life policies are best if you want a guaranteed payout, while term life may be better if you want lower monthly costs and enough cover for things like your mortgage. If you’re looking for a large payout, remember this is determined by the terms of a policy, not the type of policy.
If you're looking for a policy that can build a cash value over time, you will need a permanent policy, such as whole life. Some providers may offer for your policy to be borrowed against, giving you flexible assets. Should you need to, you can take out a loan with no credit check or income requirements. Then your death benefit will be reduced by the loan amount (plus any accrued interest). Always check with your provider for detailed information.
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Post Office Over 50s Life Cover is underwritten by Aviva Life & Pensions UK Limited and jointly administered by Neilson Financial Services Limited and Aviva Life & Pensions UK Limited. If you buy Post Office Over 50s Life Cover in a Post Office branch, it is arranged and sold by Post Office Limited and Post Office Management Services Limited. If you buy Post Office Over 50s Life Cover 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 Over 50s Life Cover 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.
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.
†Gift card or Experience offer ends 30 April 2027. Minimum premiums and 180-day qualifying period applies.
* Restrictions apply, see amazon.co.uk/gc-legal
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.
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