Compare Life Insurance: Costs, Cover Types & How to Choose

Compare life insurance by weighing three things against your situation: the type of cover (term or whole-of-life), the sum assured (the lump sum paid out) and the monthly premium. Straightforward term cover can be available at relatively low monthly prices for some younger, healthy non-smokers, while whole-of-life and larger sums cost considerably more. The cheapest quote is rarely the only thing that matters.

Prices are not fixed tariffs. Your premium is priced individually on your age, health, smoking status, occupation, the amount of cover and the policy length, so two people can get very different quotes for the same product. That is why comparing like-for-like across several insurers matters more than chasing a single headline figure.

Free Price Compare arranges life cover through our protection partner LifeSearch, and we are authorised and regulated by the Financial Conduct Authority (FCA). This is information to help you weigh your options, not a personal recommendation.

Last updated: October 2026

Written by the Free Price Compare editorial team | Reviewed October 2026

What you are actually comparing

When you compare life insurance, you are comparing four things: the cover type, the sum assured, the policy term and the premium. The cover type decides whether the payout stays level, falls over time or lasts your whole life. The sum assured is the lump sum your beneficiaries receive. The term is how long the cover runs. The premium is what you pay each month to keep it in force.

Life insurance pays a cash lump sum to your loved ones if you die during the policy term (or, for whole-of-life, whenever you die). It is designed to help cover things like a mortgage, everyday living costs or a funeral. For a plain-English primer, see what life insurance is and how it works.

One point that trips people up: life insurance and life assurance are not the same. Term life insurance covers a set period and only pays out if you die within it; whole-of-life assurance is guaranteed to pay out eventually. We explain the distinction in our guide to the difference between life insurance and life assurance.

How much does life insurance cost in the UK?

Life insurance premiums can be relatively low for some younger, healthy non-smokers taking straightforward term cover, but generally rise with age, health conditions, smoking and larger sums assured. There is no single “average premium” that applies to everyone, because each policy is priced on the individual.

To show the spread, Drewberry’s 2026 calculator quotes around £6.93 a month for £250,000 of level term cover over 25 years, and around £5.24 a month for the same sum as decreasing cover. Whole-of-life is a different order of cost: the same Drewberry calculator shows around £12.38 a month for £15,000 of whole-of-life cover. Legal & General reports an average monthly life insurance cost of £26.33 based on its 2025 figures; this is a provider-reported figure and not a market-wide average.

These examples are not directly comparable because they use different sums, terms and underwriting assumptions. Treat low introductory or marketing prices as examples rather than typical prices. For a fuller breakdown by age and cover level, read our guide to the cost of life insurance in 2026.

See indicative life insurance prices for your situation

What is the cheapest type of life insurance?

Decreasing term insurance is usually the cheapest type of life insurance, because the sum assured falls over time, so the insurer’s maximum liability reduces each year. Level term, where the payout stays the same throughout, costs a little more. Whole-of-life assurance is the most expensive because a payout is certain to happen eventually.

Decreasing term is often used to track a repayment mortgage, where the balance owed falls each year. Level term suits people who want a fixed lump sum regardless of when they die within the term, for example to leave a set amount to a family. Neither is automatically “better”: the right fit depends on what the money is meant to do.

• Decreasing term – cheapest; payout reduces over time; often matched to a repayment mortgage.
• Level term – fixed payout throughout the term; useful for family protection or an interest-only mortgage.
• Whole-of-life – most expensive; pays out whenever you die, so often used for funeral costs or estate planning.

Keeping the cover simple keeps it cheaper. Adding features such as critical illness cover increases the premium, because the policy can also pay out on diagnosis of a listed serious condition. We cover how that combination works in our guide to life and critical illness cover.

How do I compare life insurance companies?

To compare life insurance companies, compare like-for-like: the same sum assured, the same term and the same cover type across each insurer, then look beyond price at claims record, policy definitions and any extra benefits. A cheaper monthly premium means little if the policy definitions are narrower or the critical illness list is shorter.

Price is set individually by each insurer’s underwriting, so quotes differ. For context, quotes for the same level of cover can vary across insurers, even when the applicant and policy term are the same. Small gaps like that make the non-price factors, such as how a condition is defined or whether a waiver of premium is included, worth checking.

Things worth comparing alongside the headline premium:

• Whether cover is level, decreasing or whole-of-life, and the exact sum assured and term.
• Any added benefits, such as critical illness cover, terminal illness cover or a waiver of premium clause that keeps the policy running if you cannot work.
• Independent financial strength and product ratings, such as Defaqto’s, as one neutral reference point.
• Whether the insurer offers the option to write the policy in trust.

Free Price Compare arranges life cover through our protection partner LifeSearch, and a quote takes only a few minutes. We present the options and the trade-offs so the choice stays yours.

Compare life insurance quotes in minutes

How much cover do I need?

The amount of cover you need depends on what the payout is meant to do, not on a single rule. Common starting points include covering an outstanding mortgage, replacing lost income for dependants, or leaving a set lump sum for a specific purpose such as childcare or a funeral. A higher sum assured means a higher premium.

Many people size cover around a mortgage balance plus a buffer for living costs, or a multiple of annual income. Those are rules of thumb, not prescriptions: a single person with no mortgage and no dependants has very different needs from a parent who is the main earner. Rather than replacing all future income with one lump sum, some people spread protection by combining a lump-sum policy with family income benefit, which pays a regular tax-free income instead.

If your main worry is losing your earnings through illness rather than death, income protection insurance works differently and can sit alongside life cover. Weigh what each type is designed to replace before deciding how much of each you want.

Not sure how much cover fits your situation?

Compare term, decreasing and whole-of-life options side by side with no obligation.

Compare life insurance

Can you have more than one life insurance policy?

Yes, you can hold more than one life insurance policy in the UK, and many people do. There is no legal limit on the number of policies, and insurers do not require you to disclose other cover simply to take out a new policy, provided you answer the application questions honestly.

Layering policies can make sense when different debts or responsibilities have different timescales. For example, one decreasing term policy might track a 20-year mortgage while a separate level term policy covers the years your children are financially dependent. When each policy ends, you stop paying for cover you no longer need. The trade-off is more admin and, sometimes, slightly higher total cost than a single larger policy, so compare both approaches.

How long do comparison quotes stay valid?

Life insurance quotes from comparison tools are usually indicative rather than guaranteed, so the price can change once your full application is underwritten. An initial quote is based on the details you give at that point; the final premium is confirmed after the insurer assesses your health, medical history and any other disclosures.

This is why running many hard credit-style or full medical checks months before you intend to buy adds little. A quick comparison gives you a realistic ballpark, and you firm up the price when you are ready to apply. If your circumstances change, or you stop smoking, re-quoting later can produce a different price. There is no benefit to rushing a decision on a cover type this important.

Get an indicative life insurance quote

Is a life insurance payout taxed?

A UK life insurance payout is normally paid free of income tax and capital gains tax, but it can form part of your estate for Inheritance Tax unless the policy is written in trust. Whether Inheritance Tax applies depends on who owns the policy, whether it is held in trust and the size of your wider estate, so it is not automatic either way.

Writing a policy in trust means the payout goes directly to your chosen beneficiaries, typically outside your estate and often faster, without waiting for probate. Many insurers offer trusts at no extra cost when you set up cover. If estate planning is a concern, it is worth checking the trust option and, for larger estates, understanding how lifetime gifts interact with Inheritance Tax via our explainer on gift inter vivos and Inheritance Tax. For complex estates, a solicitor or tax adviser can confirm the position.

How the FCA protects you when buying cover

Life insurance in the UK is regulated by the Financial Conduct Authority (FCA), which sets rules on how firms sell and describe protection products. Under the FCA’s insurance conduct rules, before an insurance contract is concluded a firm must specify the customer’s demands and needs and ensure the proposed policy is consistent with them.

That protection sits behind any FCA-authorised firm, including Free Price Compare and our protection partner. It means the person helping you arrange cover should establish what you actually want the policy to do before recommending a product, and give you clear, fair and not misleading information. If a provider overcharges customers, redress can follow, as happened in cases covered in our report on refunds for overcharged life insurance holders.

• Refunds For Overcharged Life Insurance Holders
• Should I Get Income Protection Insurance?-Free Price Compare
• E-Signature Speeds Up Medical Data Consent | FreePriceCompare
• What is life insurance? – FreePriceCompare
• Life and Critical Illness Cover | FreePriceCompare

Information correct as of 30 October 2026. Prices, tariffs, policy details and providers change frequently, so please check the latest details before making a decision. This article is for general information only and does not constitute financial advice. Free Price Compare is authorised and regulated by the Financial Conduct Authority (FCA).