Is it worth having life insurance?
If you’re thinking about getting life insurance but not sure if it’s worth it, this guide can help you decide.
We look in detail at the benefits of life insurance and what you should consider when taking out cover.
|
This guide contains general information about the insurance market and related topics. Some content may not reflect Vitality’s specific products, features, or processes. |
What is life insurance?
Life insurance gives your loved ones a lump sum when you pass away or if you’re diagnosed with a terminal illness. They can use the money for anything, like paying off a mortgage and funeral costs.
People tend to take out life insurance as financial security for their family. But you don’t need a family to have life insurance. If you have a mortgage or other debts, such as car payments, you may want to consider life insurance as part of your financial planning.
You can take out life insurance as a single person or a couple. And you don't need to be married or in a civil partnership to take out joint cover. You can have a joint policy with a friend you share a mortgage with, for example.
You can usually choose who should benefit from the policy, for example by writing it in trust or making provision in your will. Life insurance proceeds are generally not subject to income tax, although tax treatment depends on individual circumstances.
You can get life insurance from as little as £5 per month*, so it may be more affordable than you may think.
* Premiums vary based on factors such as age, health, lifestyle and the amount of cover selected.
Get a life insurance quote in minutes
The benefits of life insurance
The thing about life insurance is that you only realise how important it is when the worst has happened. When you die, nothing can replace you, but you can make sure the ones you leave behind have some financial security. Here we take a detailed look at all the main reasons why you should get life insurance.
1. Comprehensive cover for all stages of life
You can take out life insurance from the age of 16 and have it in place for the whole of your life if you want to. In fact, the younger you are when you take it out, the cheaper the life insurance premiums are likely to be.
Chances are, if you’re thinking about taking out life insurance, you’re about to make a change to your life. People often review their finances when there’s a life event, such as:
- starting work
- being promoted
- co-habiting
- buying a home
- getting married or becoming a civil partner
- becoming a parent
- retiring
- funeral planning.
As a result, there are a range of life insurance products that you can use throughout your life.
Early working life
Life insurance may not be top of your agenda at this point, but it’s still worth considering.
Also check with your employer if they offer a lump sum payout to your family if you die while employed by them. This is sometimes called ‘death-in-service benefit’. If they don't, you could consider taking out life insurance to pay for your funeral, so your family won’t have to cover the cost.
Find out more: Life insurance for young adults explained
Settling down
When you’re committed to being with another person you probably want to make sure they’re financially cared for if you die. This can be at any stage of life – not just when you’re young. And you don't have to be married or in a civil partnership to leave a life insurance payout to loved ones.
You might also be thinking about buying a property with another person. This could be your partner, or a friend. Although it is not usually a requirement of a mortgage, some people choose life insurance to help protect outstanding mortgage borrowing.
Find out more: Life insurance for couples explained
Get joint life insurance
Family life
When children come along many of us look again at the amount of life cover we have.
It’s important for parents to consider the cost of raising children if they’re no longer able to provide for them. Having life insurance in place until your children start work can be very reassuring.
Find out more: Life insurance for families explained
Caring responsibilities
You may also have other caring responsibilities, for example, for a parent or sibling. If something happened to you, the life insurance payout could help them with their living costs.
You may want to leave a legacy, contribute to your funeral costs or make a donation to charity when you die. A life insurance policy can help you do these things.
Find out more: Over 50s life insurance explained
Retirement
Life insurance can sometimes be used as part of estate planning. Depending on your circumstances, inheritance tax may be due on your estate when you die. Putting a whole of life policy into trust can help settle an inheritance tax bill. There’s more about this below.
Find out more: Whole of life insurance explained
2. Financial security for your loved ones
It’s only natural to want to look after your loved ones. And providing for them if you die is one way to help support them financially. Many people find this particularly important to consider if they earn more than their partner or are a sole parent.
A life insurance payout can help to:
- pay for day-to-day living expenses
- cover education costs
- maintain your family’s standard of living
- supplement a lack of savings.
3. Debt and mortgage protection
Outstanding debts may need to be settled from your estate after your death. The money you’ve borrowed still needs to be paid back and will be taken out of any savings and assets you have.
Having a life insurance policy means that these debts can be paid out of the life insurance payout leaving your savings and assets for your family.
Your mortgage is probably the largest debt you have. There are a range of life insurance policies tailored to the type of mortgage you have. Repayment mortgages can be covered by decreasing term insurance. Interest only mortgages by level term insurance.
Find out more: Life insurance for first time home owners explained
4. Tax benefits and estate planning
Any payments to your beneficiaries from your life insurance will not be taxed for income or capital gains. However, unless the policy is in trust, it will become part of your estate and may be liable for inheritance tax.
If you think you’ll need to pay inheritance tax on your estate when you die, you can take out an insurance policy in trust to cover the tax bill. The policy sits outside of your estate, so is not subject to probate and can be paid quickly. This means the people looking after your estate can settle your inheritance tax bill.
Find out more: Life insurance and inheritance tax explained
5. Affordability and accessibility
It’s very easy to buy life insurance. You can buy it online from the insurance company you choose, or through a third party, like a comparison site. If you’re not sure what type of insurance you need, there are specialist insurance brokers who can help.
Prices for life insurance start from as little as £5 a month. The price you’ll be quoted will depend on several factors including your age, health, lifestyle and amount of cover. Your insurance premiums tend to increase as you get older. They may also be higher if you have a medical condition or smoke. Getting a personalised quote can give you a better idea about cost.
6. Added protection for the self-employed
When you’re self-employed, you won't automatically have the employee benefits that come with working for someone else. If you want those benefits, such as life insurance, you need to put your own cover in place.
Life insurance cover is available to those in all types of employment including the self-employed. Whether you’re a graphic designer or a roofer you’ll be able to make sure your loved ones are financially cared for.
Find out more: Life insurance for self-employed explained
7. Vitality healthy living and rewards scheme
When you take out life insurance with Vitality, you get rewarded for living healthier.
Simply download the Vitality Member app and link it to your fitness tracker. Walk or run to get active and earn points. The more points you earn, the bigger the rewards. By getting active you can get cheaper gym membership, big discounts on fitness trackers and even an Apple Watch for only £39.
Life insurance – things to consider
Before you take out life insurance, make sure you know exactly what you’re buying. Find out how much the plan will cost and whether it really suits your needs. Here are some things you should consider.
Assess the cost – make sure you can afford the premiums for as long as the plan is in place. It’s possible to pay more in to a plan than you get back with some types of insurance. Also, there’s no cash value to life insurance. If you don’t die while the plan is in place, you won’t get anything back.
Existing savings – you may not need life insurance if you have substantial savings. Or, if you have no dependants and your partner has enough money coming in to cover their needs.
Death-in-service – this is a payout to your family if you die while you’re employed. It can often be as much as three or four times your annual salary. Be sure to take this into account when deciding how much life insurance you need.
Financial priorities – when money is tight you need to make difficult choices about what to spend it on. If you have dependants or debts, life insurance is one of the most important types of insurance to have. If your quote looks expensive, you could consider reducing your cover. But make sure you don’t end up underinsured.
Health and lifestyle – your insurance company will want to know about your health and lifestyle when you take out your cover. You must be open and honest with them. So, if you or your family need to make a claim there won’t be any queries when it comes to paying out. It’s still possible to get insurance even if you have a serious illness.
Terms and conditions – always read the small print. Find out if there are any exclusions that may impact you, such as high-risk occupations for example.
Vitality life insurance
Want to know more about life insurance or thinking about taking out a policy? Here are some of the benefits of taking out life insurance with Vitality:
- A brand you can trust - In 2024, we paid out 98.9% of all Life Cover claims.*
- Get a lower monthly premium upfront when you add Optimiser to your plan. Keep your premiums low when you stay active.
- Access to Vitality partner discounts and rewards.
- Get free no-obligation advice. Our advisers offer expert advice to help you make the right decisions.
You're not alone in choosing Vitality. Over 2 million lives in the UK are now covered by our insurance, and we’re here to support you too.
Ready to take the next step? Getting a quote is simple and takes just a few minutes.
*VitalityLife Claims and Shared Value Report 2025
