Life Insurance and Critical Illness Cover: What Do You Actually Need?
If someone depends on your income — a partner, kids, a mortgage — life insurance is one of the cheapest ways to protect them. Here's the difference between the main types.
Home and car insurance protect your belongings. Life insurance and critical illness cover protect the people who depend on you financially — which matters more the moment you take on a mortgage, have children, or become someone's main earner.
Term life insurance covers you for a set period, commonly 20 or 25 years, and pays out a lump sum if you die within that term — most people time it to cover the years a mortgage or young family create the biggest financial risk. It's the cheapest and most common type: a healthy 30-year-old can often get around £200,000 of cover for under £15 a month.
Whole-of-life insurance covers you for the rest of your life rather than a set term, so it's guaranteed to pay out eventually — which is why it costs noticeably more than term cover for the same amount of cover.
Critical illness cover is a separate, often complementary, policy that pays a lump sum if you're diagnosed with a serious illness such as cancer, a stroke or a heart attack, rather than only on death. It's frequently bought alongside life insurance, though it only covers the specific conditions listed in the policy — not every serious illness.
Do you actually need it? If a partner, children or anyone else relies on your income, life insurance is one of the cheapest ways to make sure a mortgage or living costs don't fall on them if you die unexpectedly. If you're single with no dependants, life insurance is less essential, but critical illness cover can still matter — it protects you, not just your family, if an illness stops you working.
The trade-off to know about. With term insurance, if you outlive the policy, there's no payout — you're paying for protection, not a savings pot. Premiums are also cheapest when you're young and healthy, and rise the longer you wait.
What to actually do. If you have a partner, children or a mortgage, get a few comparison quotes for term life insurance — it takes a few minutes online, and the cost for a healthy adult is often lower than people expect.
General information only — not a personal recommendation. What cover you need depends on your own circumstances, health and dependants.
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Money Made Simple gives general information about money in the UK. It is not FCA-regulated financial advice and does not take your personal circumstances into account. If you need advice specific to you, speak to a qualified adviser.
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