If you outlive the term of your policy, your cover ends and you normally don’t get back what you’ve paid. Life insurance is designed to work as a safety net. Your payments guarantee that if you were to die during the policy term, your family would be supported and can use the payout however they see fit.
Level term cover is also available as a joint policy. Here you cover 2 people on one easy-to-manage policy. Joint life insurance policies tend to be cheaper than taking out 2 separate life insurance policies, so they’re a useful option for couples.
The difference here is that the policy ends with the death of one of the policyholders, so if you both need cover, separate policies might be more convenient.
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"If you’re looking for a policy where the payout amount remains fixed throughout the term, level term life insurance could be a suitable option. Life changes quickly, so it’s important to review your policy regularly whether annually or after significant milestones, like welcoming a new family member. This helps ensure your loved ones have the right level of cover when they need it most."
Level term life insurance costs from £3.50 per month***.
This is just an average, and the exact price you pay for your policy depends on a few things like:
On the whole, the younger and healthier you are when you take out life insurance, the cheaper your monthly payments are.
***Dependant on age, cover term and cover amount selected. Example of a 20 year old non-smoker in good health, taking £100,000 level cover over 25 years. Based on data from online sales August 2024..
The payout from your level term policy is only taxable if it pushes the total value of your estate to more than £325,000. There are a few exceptions to the rule.
Generally, your beneficiaries don't pay inheritance tax if:
If it’s under £325,000 you pay no tax. You can find out more on inheritance tax on Gov.co.uk.
If you’re worried your life insurance payout may push your estate far above the £325,000 cut off, think about writing your life insurance in trust.
Doing this means your payout is kept separate to your estate and you don’t pay tax on it. This ensures your loved ones get your whole payout, rather than just part of it.
Pays out an amount that decreases over time, usually in line with your mortgage
Pays out a lump sum if you're diagnosed with an illness covered by your policy
Covers your bills if you're injured or ill and are unable to work. Short term policies and longer ones available
Covers the cost of private medical care, helping you avoid NHS waiting lists to get the cover you need, quickly
Page last reviewed: 01 October 2024
Reviewed by: Matthew Harwood
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