If you've started looking into life insurance, you've probably come across two main options: a policy that covers you for a set number of years, or one that lasts your entire lifetime. Both have their place, but they suit very different circumstances, and choosing between them is easier once you understand what each one is actually designed to do.
What is term life insurance?
Term insurance covers you for a set number of years, typically between 10 and 40 years. If you die within that period, your beneficiaries receive a lump sum. If you outlive it, the policy simply ends with nothing paid out.
It's the most straightforward and affordable type of life insurance. A 35-year-old non-smoker might pay around £15 per month for level term, or acknowledge that decreasing term cover costs less. Most people take it out to protect something specific, such as clearing a repayment mortgage, replacing a family income, or covering a debt that will eventually disappear.
What is whole of life insurance?
Unlike term insurance, whole of life cover has no expiry date. A payout is guaranteed whenever you die, provided premiums are kept up. The trade-off is cost, as premiums run considerably higher than term cover for the same sum assured.
People tend to use it for longer-term goals: managing inheritance tax, leaving a guaranteed legacy, or covering funeral costs. It can also be written in trust, keeping the payout outside your estate.
This matters in practice. Inheritance tax must be settled with HMRC before probate is granted, which means your beneficiaries can't access the estate until that bill is paid. If most of the value is tied up in property, that can mean having to sell under pressure. A whole of life payout, available outside probate, gives your family the means to pay HMRC without being forced into a rushed sale.
So which should you choose?
If you have a mortgage, young children, or a financial obligation with a clear end date, term insurance usually offers the most cost-effective protection. If your priorities are longer-term, such as managing inheritance tax or guaranteeing a payout for your family whenever the time comes, whole of life cover is worth serious consideration.
| Term | Whole of Life | |
| Duration | Fixed Period | Lifetime |
| Payout | Only if you die within the term | Guaranteed |
Typical use | Mortgage, family protection | Estate planning, legacy |
| Monthly cost | Lower | Higher |
Some people hold both types, pairing term cover for immediate obligations with a smaller whole of life policy for longer-term planning. But any cover is worth having; UK insurers paid out a record £8 billion in combined claims during 2024, equivalent to £21.9 million every single day.
The advisers at Moneysprite can help you explore your life cover options and identify which policy makes sense for your situation. Whether you're based in London, Southampton, Portsmouth, or elsewhere across southern England, Moneysprite is here to help you put the right protection in place.
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