Types of Life Insurance UK (2026): Every Kind Explained & Which to Choose
“Life insurance” isn’t one product — it’s a family of them, and picking the wrong type can mean paying too much or leaving a gap. This complete guide explains every main type of UK life insurance — term, whole of life, over-50s, decreasing, level, joint and critical illness — with a clear comparison and simple advice on which to choose.
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Quick Answer: The Types of Life Insurance
UK life insurance splits into two families: term life insurance (covers you for a fixed period, cheaper, pays out only if you die within the term) and whole of life insurance (covers you for life, guarantees a payout, costs more). Within term there’s level, decreasing and increasing. Other types include over-50s plans, joint policies and family income benefit, and most policies can add critical illness cover.
Term is the cheapest and most popular — ideal for a mortgage or protecting your family. Whole of life suits leaving an inheritance or covering funeral/IHT costs. Below we explain each, then help you choose. Compare types now or read how life insurance works.
What this guide covers
The Two Main Families
Almost every life insurance product is a variation on two ideas:
Term life insurance
Covers you for a fixed period (e.g. 25 years). Pays a tax-free lump sum if you die within the term; if you outlive it, cover ends with no payout. Cheapest and most popular.
Whole of life insurance
Covers you for your entire life and guarantees a payout whenever you die. More expensive, but certain. Suits inheritance, funeral or IHT planning.
Everything else — over-50s plans, mortgage cover, joint policies — is essentially one of these two, shaped for a particular need. One quick terminology note: “life assurance” and “life insurance” are often used interchangeably, though strictly assurance means a guaranteed payout — see life assurance vs life insurance.
Term Life Insurance: Level, Decreasing & Increasing
Term life comes in three flavours — the difference is what happens to the payout amount over time:
| Type | Payout over time | Best for | Cost |
|---|---|---|---|
| Level term | Stays the same | Family protection, interest-only mortgage | Moderate |
| Decreasing term | Reduces over time | Repayment mortgage (tracks the balance) | Cheapest |
| Increasing term | Rises (often with inflation) | Protecting the real value of cover | Highest |
Decreasing term is the classic mortgage companion — as your repayment mortgage shrinks, so does the cover, keeping it cheap. This is what most mortgage life insurance actually is — see provider versions from Aviva, Legal & General and Vitality. Level term keeps a fixed payout, ideal for family income protection.
Whole of Life Insurance
Whole of life insurance covers you for your entire life and guarantees a payout whenever you die — there’s no “term” to outlive. That certainty costs more, so it’s chosen for specific goals rather than general cover:
- Leaving an inheritance or a guaranteed legacy
- Covering an inheritance tax bill (often written in trust) — see life insurance & tax
- Funeral costs and end-of-life expenses
Provider versions include Aviva and Legal & General whole of life.
Over-50s Life Insurance
A specific kind of whole-of-life plan: guaranteed acceptance for ages ~50–80, no medical questions. It pays a fixed lump sum whenever you die, commonly used for funeral costs or a small legacy. The trade-offs:
⚠️ Know the over-50s catches
Premiums are guaranteed, but you may pay in more than the payout if you live a long time, and there’s usually an initial period (1–2 years) where only accidental death is covered. It’s simple and accessible, but not always the best value if you’d pass medical underwriting. See over-50s life insurance and over-60s.
Other Types of Life Insurance
Beyond the core two, you’ll come across these variations — each is term or whole of life shaped for a situation:
- Joint life insurance: one policy covering two people (usually couples), paying out on the first or second death — see joint vs single policies
- Family income benefit: instead of a lump sum, pays a regular monthly income to your family for the rest of the term
- Mortgage life insurance: decreasing or level term arranged around your mortgage
- Critical illness cover: not life insurance itself, but often added — pays out if you’re diagnosed with a serious illness. See critical illness cover and the life vs critical illness vs income protection comparison
- Relevant life & group life: employer-arranged cover — see relevant life (tax-efficient, for directors) and group life (death in service)
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Types of Life Insurance Compared
| Type | Covers | Pays out | Cost | Best for |
|---|---|---|---|---|
| Term (level) | Fixed period | If you die in term | Moderate | Family income |
| Term (decreasing) | Fixed period | If you die in term | Cheapest | Repayment mortgage |
| Whole of life | Your whole life | Guaranteed | High | Inheritance, IHT, funeral |
| Over-50s | Whole life (50–80) | Guaranteed | Moderate | Simple guaranteed acceptance |
| Family income benefit | Fixed period | Monthly income | Moderate | Replacing lost income |
Which Type Should You Choose?
Match the type to what you’re protecting:
- Mortgage? Decreasing term (repayment) or level term (interest-only)
- Young family / income to replace? Level term, or family income benefit
- Guaranteed payout for inheritance, IHT or funeral? Whole of life
- Over 50, want simple acceptance? An over-50s plan (but compare with underwritten term first)
- Business owner / director? Relevant life or group life
Still unsure? Work out how much you need with the life insurance calculator, check how long cover should last, and compare providers via the best UK life insurers. It’s also worth knowing what life insurance doesn’t cover before you buy.
Frequently Asked Questions
What are the main types of life insurance in the UK?
The two main types are term life insurance, which covers you for a fixed period, and whole of life insurance, which covers you for life and guarantees a payout. Within term there are level, decreasing and increasing versions. Other common types include over-50s plans, joint policies, and family income benefit. Many policies can also add critical illness cover. Term is the cheapest and most popular choice in the UK.
What’s the difference between term and whole of life insurance?
Term life insurance covers you for a set number of years and only pays out if you die within that term, which makes it cheaper. Whole of life insurance covers you for your entire life and guarantees a payout whenever you die, so it costs more. Term suits temporary needs like a mortgage or raising children, while whole of life suits leaving an inheritance or covering funeral and inheritance tax costs.
What is the cheapest type of life insurance?
Decreasing term life insurance is usually the cheapest, because the payout reduces over time in line with a repayment mortgage. Level term is a little more as the payout stays fixed. Both are far cheaper than whole of life insurance, which guarantees a payout and therefore costs significantly more. Buying young and in good health lowers the premium for any type.
What type of life insurance is best for a mortgage?
For a repayment mortgage, decreasing term life insurance is the natural fit, as the cover reduces alongside your shrinking mortgage balance, keeping it cheap. For an interest-only mortgage, level term is better because the debt stays the same. The term is usually set to match the years left on the mortgage. Mortgage life insurance is simply term cover arranged around the loan.
What is over-50s life insurance?
Over-50s life insurance is a guaranteed-acceptance whole of life policy for people aged roughly 50 to 80, with no medical questions. It pays a fixed lump sum whenever you die, often used for funeral costs or a small legacy. Premiums are guaranteed but you may pay in more than the payout if you live long, and there’s usually an initial period where only accidental death is covered.
Can I combine different types of life insurance?
Yes, and many people do. A common approach is a decreasing term policy to cover the mortgage plus a separate level term policy for family income, sometimes with critical illness cover added. This layering lets cover end at different times as needs change and can be more flexible, and sometimes cheaper, than one large policy. Each policy is underwritten and priced separately.
Which type of life insurance should I choose?
Match the type to what you’re protecting. For a mortgage or raising children, term life insurance is usually best and cheapest. For a guaranteed payout to leave an inheritance or cover funeral or inheritance tax costs, whole of life fits better. If you’re over 50 and want simple guaranteed acceptance, an over-50s plan may suit. Comparing quotes for your situation is the best way to decide.
ℹ️ Important Disclaimer
This guide is general information only and is not financial advice. Life insurance products, terms, exclusions and pricing vary by provider and personal circumstances — always read the policy documents and consider advice from an FCA-regulated adviser before buying. The tax treatment of life insurance depends on your individual situation and may change; writing a policy in trust can affect inheritance tax and payout speed.
We may earn commission when readers compare cover through our links, which funds our research but doesn’t affect our guidance. See our disclaimer and terms.
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