How long does my life insurance need to last?

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April 4, 2022

Arranging life insurance is a serious business that requires careful consideration to ensure you get the right policy for the right length of time, but without paying over the odds. So where do you start?

First and foremost you need to decide who the beneficiary of a policy should be. Do you want a life insurance policy to pay off your mortgage should you die unexpectedly or fall critically ill? Or, do you want a whole life policy that is guaranteed to pay out to your loved ones at whatever age you die with an option to cash in part of your policy early should you want or need to?

If you’re right at the very start of your life insurance purchasing journey, alongside deciding on who should benefit from your life insurance, you should also consider the type of cover you need. For help, take a look at our blog: “Which life insurance policy should I get?” to consider the type of policy you would like and that will best suit you (and your family’s)  individual needs.

Bear in mind when choosing a policy that if you have any serious health conditions, this will considerably bump up the cost of your policy and you may be required to have a medical examination before being approved.

Once you’ve familiarised yourself with the different life insurance policy options such as  fixed term, decreasing term, whole of life and over 50s life insurance, if you decide to choose term life insurance, you should then consider the length of your policy’s term.

The term length (number of years) a life insurance policy should cover will differ according to your individual needs and the type of policy you choose - and how deep your pocket is!

Key takeaways:

  • Your unique set of financial circumstances and any financial dependants you may have will help determine how long your life insurance needs to last.
  • The older you get, the more potentially life-shortening health conditions you get and the more expensive your life becomes to insure.
  • If you have financial dependants, make sure your life insurance sum insured covers all major debts such as your mortgage.
  • If you can afford to, make sure your life insurance will pay out a little more than what you need to cover your debts to allow for inflation - or consider getting an index-linked policy.

Decreasing of fixed term life insurance for a mortgage: typically needs to last 25-40 years*

The term of life insurance policies to specifically cover mortgage debts will typically be for the exact number of years left on a mortgage until it’s paid off in full.

For example, if you’re about to buy your first house, have financial dependants (loved one/s who depend on you financially) and want to know that your mortgage debt will be fully paid off in the event of your untimely death, then the length of your insurance term should be the same as your mortgage - typically 20-30 years. There are of course much shorter term mortgages but in this example we’re using the average mortgage length for the majority of UK homeowners.

Because it works out much cheaper, many homeowners choose a decreasing term life insurance policy to cover their repayment mortgage where the premiums reduce alongside your mortgage.

Read more: Level term vs. decreasing term life insurance

Mortgage life insurance is a much cheaper alternative to whole of life insurance as in the happy event you’re still alive when you pay off your mortgage (yay!), sadly your premiums will be lost and there will be no payout on your policy (boo!).

However, this type of policy does what it says on the tin: it will cover your mortgage and if that’s all you really need and can afford to pay for, then this could be the cheapest policy with a flexible term that suits you best.

Note: If your mortgage changes, remember to review your life policy to see if it’s still fit for purpose and if you pay your mortgage off early, make sure you cancel your insurance to save yourself some pennies.

You might like: Benefits of putting your life insurance in ‘trust’

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Level term life insurance for your family: typically needs to last 18-25 years*

If you want cover until your children are young adults, a good length for term life insurance (if you’re taking it out when your child or children are still babies or toddlers) is approximately 18-25 years.

However, if you’re taking a policy out a bit later on in life when you children have long since discarded their lego set in favour of a smartphone, you can of course afford to shave a few years off the length of your policy and could instead opt for a much shorter term of, say, 5-10 years.

Bear in mind that the longer the term, the more expensive your policy will be so try to assess how long you really need financial backup for and then check if you can afford the monthly premiums.

Also, if you don’t have children and just want to make sure a spouse/civil partner or common law partner are looked after (or anyone else of your choosing), you may want the life insurance policy to last until you're financially solvent or, say, your retirement.

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Whole of life insurance: typically lasts for life

By far the most expensive but most comprehensive form of life insurance is a whole life insurance policy.

Unlike term life insurance, this policy, again, does what it says on the tin: it covers the entirety of your life until you die, although some insurers now have a ‘cut off’ age of, say, 90 or 100 years old - just as long as you continue to pay your premiums.

So we can’t really advise you about how long this type of policy should last but if you’d like to know more, visit our whole of life insurance product page.

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Over 50’s life insurance: typically lasts for life

Similar to whole life assurance, over 50s life insurance will payout when you die from the policy start date. However, this is a very basic policy that requires no medical and is usually only suitable to help towards funeral costs.

Read more: Over 50’s life insurance

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Critical illness cover: can last up to 40 years

This is usually an ‘add on’ to a policy and how long you’ll need cover for will again be determined by your debts and dependants, or your personal preferences if you’re debt and dependant free.

Another major factor with critical illness cover is your age - most insurers will have a ‘cut-off’ age of around 70 years old meaning you cannot be insured for critical illness after this age.

You should also bear in mind that if you have any preexisting health conditions you could struggle to get critical illness cover or if you can, the premiums could be unaffordable and not worthwhile. However, that said, you can now get critical illness cover for type 2 diabetes.

Read more: A guide to critical life insurance

* Please note all policy term guidance years are approximate and are NOT intended as a definitive guide; the term of a policy ultimately depends on your individual circumstances and what you are able to afford.

For a selection of the best life insurance deals on the market, including those currently offering free gifts and cashback, take a look at what Bobatoo has to offer. With Bobatoo, you can save yourself a bob or two and protect your loved ones for as little as £5 per month and compare quotes from the best life insurance companies in the UK.

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