Life insurance calculator

Term life insurance

Term insurance policies run for a set period of time - the ‘term’ of your policy - and are often taken out to tie up with the amount of time left to pay back a loan or a mortgage. It’ll ensure your partner or children are able to pay off the balance or meet the repayments of the loan upon your death. This type of insurance will only pay out if you die during the policy term.

The two different types of term insurance you can get are; decreasing term and level term.

Decreasing term cover means that the payout reduces in line with your mortgage balance, so the amount you’re covered for decreases as you pay your mortgage off. This is usually the cheapest type of life insurance, and works best if you have a repayment mortgage, where the amount of money you’ve borrowed is fully paid off at the end of your mortgage term.

Level term cover means that the payout is fixed for the length of your policy, paying a lump sum which doesn’t reduce like a decreasing term policy. This can be a good option if you want to ensure your dependents have money to cover more than just your mortgage payments. It can also work well for interest-only mortgages where the balance doesn’t reduce over time.

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Whole of life insurance

‘Whole life’ cover means that you’ll be protected for the rest of your life, rather than just a fixed time period. That means that no matter when you die, your family will receive support - so it can be a good option if you want reassurance that they’ll be protected, without the hassle of taking out a new policy every ten or twenty years.

There are also other types of life insurance, like:

• Joint life insurance, where you and a partner are covered under one policy
• Over 50s insurance - usually whole of life insurance for those aged over 50
• Critical illness cover, which makes a lump sum payment if you contract one of a list of specified medical conditions
• Terminal illness insurance, which usually pays out if you’re diagnosed with a terminal illness
• Children’s cover, which can help if you need extra medical care for a child with a serious injury, illness, or accidental death

Do you need life insurance to cover a mortgage?

It’s not a legal requirement to have life insurance in place to get a mortgage, although some lenders will recommend that you do have it in place. We can help you to understand if you need a life insurance mortgage plan.

If you don’t have any dependents, then you probably don’t need life insurance. However, whoever inherits your property when you die would need to either sell it to clear the mortgage, or be in a position to pay it off if they wanted to keep the property.

Life insurance cost

The cost of life insurance depends on the amount of cover you need which in turn depends on your personal circumstances. It will also be affected by a number of different factors, for example:

• Your age
• Your health
• Your lifestyle
• If it’s a single or joint policy
• The amount of cover you need
• The policy length

The actual amount you’ll need will depend on things like:

• How much of your mortgage do you still have to pay off?
• If you rent, how much will your family need to pay after your death?
• Do you have any loans or credit cards that need to be paid off?
• How much do you have in other debts, like car finance?
• Does your family need future support, such as childcare costs or university fees?
• Do you have any other life cover in place, like death in service cover from your employer?

You can use our life insurance calculator to work out how much cover you might need based on these factors.