Brits take an average of 10 months to arrange a life insurance policy, with just over a third of people keeping it on their to-do list for between one and two years.
A survey by the Post Office has outlined the reasons why people put off arranging insurance. Most commonly, respondents blamed intimidating paperwork and said they struggled to find the time to sign up for a policy.
But should life insurance be higher up on your list of priorities? We investigate the pros and cons.
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products
Who should consider life insurance?
Life insurance might not be a must-have for everyone, but it can provide financial security for your loved ones if the unexpected happens. Here are some situations where it might be worth considering:
- Buying a home: a mortgage is a long-term financial commitment, and life insurance can help ensure repayments don’t become a burden if you’re no longer around.
- Moving in with a partner: sharing a home often means sharing financial responsibilities. Some couples opt for joint life insurance, which provides a single payout, while others choose separate policies.
- Starting a family: parenthood can come with a range of financial commitments, from childcare to school fees and university costs. Some parents choose to take out life insurance to provide financial support for their children if they’re no longer around.
- Planning for inheritance tax: if your estate is likely to exceed the inheritance tax threshold, life insurance could help cover the bill and ease the burden on your family.
Find out more: how to write life insurance in trust
The pros and cons of taking out life insurance
If you're unsure about whether life insurance is worthwhile, here’s a look at the potential benefits and downsides.
Pros of life insurance
- Helps support your family financially: if you have a partner, children, or anyone who depends on your income, life insurance can provide a safety net. It could help cover mortgage payments, rent, household bills, or even future costs like university fees.
- Provides peace of mind: knowing your loved ones wouldn’t struggle financially if something happened to you can be reassuring, especially if you have debts or shared commitments.
- Flexible options to suit your situation: you can choose term life insurance, which covers you for a set number of years (for example, until your mortgage is paid off or your kids become independent), or whole-of-life insurance, which guarantees a payout whenever you pass away.
- Can help with inheritance tax: if your estate is large enough to be taxed, a life insurance payout (if set up in trust) could help cover the bill, so your family doesn’t have to sell assets to pay it.
Cons of life insurance
- Extra monthly cost: life insurance premiums can add up, especially if you take out a policy later in life or want a large payout. Many younger people delay getting life insurance due to the cost. 66% of millennials believe it’s too expensive, according to Capgemini Research Institute.
- You might not need it: if you don’t have financial dependents or major financial commitments, life insurance may not be necessary. Unlike savings or investments, you don’t get anything back unless a claim is made.
- Other ways to protect your finances: life insurance isn’t the only option. Depending on your situation, you might prefer:
- Savings and investments: setting money aside over time could provide a financial cushion for your family.
- Income protection insurance: pays you a portion of your salary if you can’t work due to illness or injury.
- Critical illness cover: provides a lump sum if you’re diagnosed with a serious health condition.
- Redundancy insurance: supplies short-term financial support if you’re made redundant.
- Family income benefit: pays out monthly instead of a lump sum, helping with ongoing costs.
It pays to be proactive
Dean Sobers, Which? insurance expert says:
'Thinking about insurance means contemplating situations we don’t want or really expect to be in. Life cover (or – let’s be frank – death insurance) is the gloomiest of all, so it’s little wonder it’s a purchase that tends to get put off.
'But not only does having life insurance afford you some peace of mind that, should the worst happen, your loved ones will be financially protected; it’s also generally cheaper the younger you are, meaning it pays to be proactive and arrange your life insurance early on.
'This said, it’s also important not to make a rushed purchase. If you’re unsure of which kind of cover or insurer would be best for you, consider taking expert advice.'
How do I set up a life insurance policy?
For some, the process of setting up life insurance is fairly straightforward, while for others, it can feel more complicated, especially when choosing the right type of cover.
To help, here’s a general step-by-step guide to how it works:
- Choose the type of cover: decide between term life insurance or whole-of-life insurance. See our guide to the different types of policy.
- Work out how much cover you need: think about how much money your family would need if you weren’t around. This is called the 'death benefit' and should cover things such as mortgage payments, bills and everyday living costs.
- Fill out an application: you’ll need to answer some questions about your health, lifestyle, and medical history.
- Health check (if needed): insurers sometimes ask for a medical exam or check your medical records to assess the risk before offering cover, which can make the process take longer if you have existing health conditions.
- Understand the cost: check how much you’ll need to pay (your premium) and how often. You can usually pay monthly or annually.
- Decide how long you need cover for: if you’re choosing term life insurance, you’ll need to pick how many years your policy lasts, for example, until your mortgage is paid off or your children are financially independent.
- Choose who would get the payout: this is known as your 'beneficiary', and you can update this later if your situation changes.
- Know your payment deadline: insurers usually allow a grace period if you miss a payment before cancelling the policy, so it’s good to check.
- Making a claim: if you pass away, your beneficiaries will need to contact the insurer and file a claim to receive the payout.
Find out more: best private health insurance 2025
