Term Life Insurance
The simplest, lowest cost life cover. You pick an amount and a number of years, and it pays your family a tax free lump sum if you die within that time, subject to eligibility and policy terms.
Get my quoteWhat Term Life Insurance Is
Term life insurance is the simplest and most common type of life cover. You choose an amount of cover and a number of years, called the term. If you die within that term, it pays your family a tax free lump sum. If you outlive the term, the cover simply ends and there is no payout.
It is the cheapest way to protect your family for a set period, such as while you have a mortgage or while the children are growing up. You can choose cover that stays level, falls over time, or rises with inflation.
How It Works
You choose how much cover you want and how long you want it for. You then pay a monthly premium, which is usually fixed for the whole term. If you die at any point during the term, the policy pays your family a tax free lump sum. If you are still alive when the term ends, the cover stops and nothing is paid.
That is exactly why term cover is so cheap. You are only paying for protection during the years you actually need it, such as while a mortgage is being repaid. Most policies also include terminal illness cover, which pays out early if you are diagnosed with a terminal illness during the term. There is no cash in value, so the cover is purely protection.
Types Of Term Cover
Term cover comes in a few shapes, which change how the payout behaves over the years.
| Type | Payout | Best for |
|---|---|---|
| Level term | Stays the same | A fixed lump sum for family, an interest only mortgage, or debts |
| Decreasing term | Falls over time | A repayment mortgage, where it is often called mortgage life insurance |
| Increasing term | Rises with inflation | Keeping the real value of the cover over a long term |
| Family income benefit | A regular monthly income | Replacing lost income for the family rather than a lump sum |
Decreasing term is usually the cheapest and increasing term the dearest. Family income benefit pays an income for the rest of the term instead of a lump sum.
What It Costs
Term life is the lowest cost type of life insurance. The price depends mainly on your age, your health and whether you smoke, then the amount of cover and the length of the term. Decreasing term is cheaper than level term, because the payout reduces over the years.
Prices for the same cover can vary by around 20% to 40% between insurers, so it always pays to compare. Your premium is normally fixed when you start, so it does not rise as you get older during the term.3
How Much Cover And How Long
A simple way to size your cover is to add up what your family would need if your income stopped: the amount left on your mortgage, any other debts, and a sum to replace your income or cover living costs and childcare for a few years.
For the term, a good rule is to cover the years your family depends on you. That usually means until your mortgage is paid off, or until your youngest child is financially independent, whichever is later. Choosing the right length avoids paying for cover you do not need.
“Term cover is where most families get the best value, because you only pay for the years you need. Match the term to the years your family relies on you, pick level cover for a family sum and decreasing for a repayment mortgage, and check the premium is fixed for the whole term. Then compare, because the same cover can be a third cheaper elsewhere.”
What Affects The Price
- Age. The biggest factor. The younger you start, the cheaper the cover, and the price is fixed at the age you begin.
- Smoker status. Smokers usually pay around double. You count as a non smoker after 12 months with no nicotine.
- Your health. Your medical history, weight and family history can affect the price.
- Cover and term. More cover and a longer term both cost more.
- Type of cover. Decreasing is cheaper than level, and adding critical illness raises the price.
Term Or Whole Of Life
Term and whole of life suit different jobs. Term cover protects you for a set period and is far cheaper, which makes it the right choice for most families covering a mortgage or raising children. Whole of life never ends and always pays out, but costs much more, so it is used mainly to leave a guaranteed legacy or to help with an inheritance tax bill.
If your need has an end date, term is usually the answer. If you want cover that is certain to pay out whenever you die, whole of life is the one to look at.
Things To Know
- No payout if you outlive the term. That is the trade off that keeps term cover cheap. It is protection, not a savings plan.
- No cash in value. If you stop paying, the cover ends, so choose a premium you can keep up.
- Terminal illness cover is usually included. It pays out early if you are diagnosed with a terminal illness during the term.
- You can add critical illness. For an extra cost, the policy can also pay out if you are diagnosed with a serious illness.
- Write it in trust. A trust sends the payout straight to your family, usually faster and outside your estate for inheritance tax.
Why Use Surely
Term cover is simple, but the price for the very same protection can differ a lot between insurers. Surely helps you find value.
We explain level, decreasing and increasing cover in plain English, and compare quotes from selected UK insurers so you can see the difference for the same cover. We compile and cross check real UK pricing and claims data.
The reassurance is in the numbers. In 2024, UK insurers paid a record £8 billion in protection claims, with around £4 billion of that in term life cover and about 97% of life claims paid.1 Surely helps you compare and get quotes online, and does not give advice itself.
Frequently Asked Questions
What happens if I outlive the term?
The cover simply ends and there is no payout. That trade off is why term insurance is the cheapest type of life cover. If you still need protection, you can take out a new policy, though it will cost more at an older age.
Should I choose level or decreasing term?
Decreasing term tracks a repayment mortgage and is cheaper, because the payout falls as your mortgage shrinks. Level term keeps a fixed sum, which suits family protection, an interest only mortgage or other debts.
How long should the term be?
Usually until your mortgage is paid off or your youngest child is financially independent, whichever is later. The aim is to cover the years your family depends on your income.
Will my premium change?
With most term policies the premium is fixed when you start and stays the same for the whole term, so it does not rise as you get older.
Can I add critical illness cover?
Yes, for an extra cost. The policy then also pays out if you are diagnosed with a serious illness listed in the policy, not only on death.
Is the payout taxed?
It is paid tax free. It counts towards inheritance tax, charged at 40% above £325,000, unless the policy is written in trust. Tax treatment depends on your circumstances and can change.
This guide deals with death and serious illness. For impartial money guidance you can use MoneyHelper, the government backed service.
Getting Started
Work out how much cover you need and for how long, then choose level or decreasing to match. Decide whether to add critical illness, answer the health questions honestly, and compare a few insurers for that exact cover. Buy while you are young and healthy if you can, and write the policy in trust.
All prices on this page are illustrative and compiled from published UK pricing. They are not quotes. Cover, price and eligibility depend on your age, health, smoker status, the cover and term you choose and the insurer. Surely helps you compare insurance and does not provide regulated financial advice.
How We Researched This Guide
We write our guides from named, public UK sources and cross check the figures rather than rely on a single site. Where we say “Surely analysis”, it means we have compiled and compared published pricing, not produced live quotes.
The data on this page draws on:
- Association of British Insurers and Group Risk Development, protection claims data 2024, for claims paid, the term life share and the average payout.
- Financial Conduct Authority, pure protection market study 2026, for the share of UK adults with no protection.
- Published UK pricing and plan terms, 2025 to 2026, for cost by age, level versus decreasing pricing and maximum term lengths.
- MoneyHelper, impartial guidance on life insurance.
Cost figures are illustrative examples for a healthy applicant, not quotes. Your own price depends on your age, health, smoker status, cover and term.
Surely compares cover from a selected panel of UK insurers and protection advisers, not the whole of the market. When you ask for a quote you may receive one online or be contacted by a qualified protection adviser from our panel. Surely may receive a commission, which does not affect the price you pay.
Written and reviewed by Paul Gillooly, Founder of Surely. Last reviewed June 2026.
Sources
- Association of British Insurers and Group Risk Development, “Record £8bn paid out in vital protection claims during 2024”, published July 2025. Around £4 billion paid in term life claims; average life insurance claim £79,703; around 97% of life claims paid.
- Financial Conduct Authority, pure protection market study, 2026: around 58% of UK adults hold no pure protection product.
- Surely analysis of published UK life insurance pricing and plan terms, 2025 to 2026: terms up to about 40 years; decreasing term usually 25% to 40% cheaper than level term; the same cover varies around 20% to 40% between insurers. Figures are illustrative and not quotes.
- MoneyHelper, impartial guidance on life insurance.
