Why Do You Need Life Assurance? A Plain-English Guide for UK Families
Published 14th of April 2011·Updated 27 April 2026
Reviewed by: Reviewed for accuracy April 2026
You need life assurance if other people depend on your income. If you have a partner, children, or a mortgage, and you died tomorrow, life assurance would pay your family a lump sum to cover what they would lose. Without it, your family could face serious financial hardship on top of grief.
Short Summary
Life assurance pays a tax-free lump sum to your beneficiaries when you die. The purpose is to replace your income and clear your debts so your family can keep their home and maintain their standard of living.
You need it most when you have financial dependants: a partner who does not work full time, young children, or a mortgage that your household could not service on one income alone.
The amount of cover you need depends on your debts, your income, and how long your dependants need support. A common starting point is ten times your annual salary, plus the outstanding balance on your mortgage.
Life assurance is not the same as life insurance in all contexts. "Life assurance" typically refers to whole-of-life policies that pay out whenever you die, while "life insurance" often refers to term policies that only pay out if you die within a fixed period. Both have their place depending on your circumstances.
Premiums can be very low for healthy people in their 20s and 30s. According to the Association of British Insurers (ABI), the average term life insurance policy costs under £20 a month, though your actual premium depends on your age, health, and the level of cover.
Who actually needs life assurance?
The simplest test is this: if you died, would someone else struggle financially? If yes, you need life assurance. If no dependants rely on your income and you have no debts, it is far less pressing.
The need is clearest in these situations: you have a mortgage in your name; you have children under 18; your partner earns significantly less than you or does not work; or you are self-employed and have no employer death-in-service benefit.
A single person with no dependants, no mortgage, and modest debts has limited need for life assurance. As their circumstances change (buying a home, having children, getting married), the need typically becomes significant.
What happens to your family without life assurance?
Without cover, your family faces having to manage on reduced income at exactly the moment they are least able to handle it. Your partner may need to return to work immediately, reduce spending sharply, or in the worst cases, sell the family home.
State benefits provide a limited safety net. The Bereavement Support Payment from the DWP pays up to £3,500 as a lump sum plus up to 18 monthly payments of £350, but this is not enough to replace a full income for a family with a mortgage and young children.
StepChange, the debt charity, reports that bereavement is one of the most common triggers for financial crisis. Having life assurance in place removes this risk entirely.
How much life assurance cover do you need?
A standard starting point is to multiply your annual salary by 10, then add your outstanding mortgage balance. So if you earn £35,000 and have £150,000 left on your mortgage, you would look for around £500,000 in cover.
This is a rough guide. Your actual needs depend on your children's ages (younger children need more years of income replacement), whether your partner works, and your other debts.
| Situation | Suggested cover level |
|---|---|
| Mortgage only, no children | Outstanding mortgage balance |
| Young children, one main earner | 10x salary + mortgage balance |
| Two incomes, shared mortgage | At least 5x salary each + mortgage share |
| Self-employed, no death-in-service | 10x salary + all debts |
| No dependants, no mortgage | Minimal or none needed |
What types of life assurance policy are there?
There are two main types to know about: term life insurance and whole-of-life assurance.
Term life insurance covers you for a fixed period, typically 10, 20, or 25 years. It pays out if you die within the term. It is the most affordable option and suits most families with a mortgage and young children. A decreasing term policy reduces in line with your mortgage balance, which keeps premiums low.
Whole-of-life assurance covers you for your entire life and pays out whenever you die, with no expiry date. Premiums are significantly higher, and it is most commonly used for inheritance tax planning rather than income protection.
| Policy type | Pays out when | Cost | Best for |
|---|---|---|---|
| Level term insurance | Death within fixed term | Low-medium | Families, mortgage holders |
| Decreasing term insurance | Death within fixed term | Low | Repayment mortgage holders |
| Whole-of-life assurance | Death at any age | High | Inheritance tax planning |
| Family income benefit | Death within fixed term (pays monthly income) | Low | Families needing income replacement |
Does your employer already provide life cover?
Many employers offer "death in service" benefit, which pays a multiple of your salary (typically two to four times) to your next of kin if you die while employed. Check your employment contract or ask your HR department.
Death in service cover is valuable but has two limitations. First, it ends when you leave the job. Second, it may not be enough on its own, particularly if you have a large mortgage or several dependants. Use it as a supplement to your own policy, not a replacement.
If you are self-employed, you have no employer cover at all. Getting your own policy is the only way to protect your family.
How do you buy life assurance in the UK?
You can buy life assurance directly from insurers such as Aviva, Legal and General, Royal London, and Scottish Widows, or through a comparison site such as Compare the Market or MoneySuperMarket.
A whole-of-market independent financial adviser (IFA) can assess your full situation and recommend the most suitable policy. You can find a regulated adviser at unbiased.co.uk. This is worth doing if your circumstances are complex, for example if you have health conditions, a large estate, or business interests to protect.
Premiums are fixed at the time you apply. Buying at a younger age and in good health gives you the lowest possible cost for the life of the policy.
FAQ
What is the difference between life assurance and life insurance?
The terms are often used interchangeably, but technically "life assurance" refers to whole-of-life policies that are certain to pay out eventually, while "life insurance" refers to term policies that only pay out if you die within a set period. For most families with a mortgage, term life insurance is the more appropriate and affordable option.
Does life assurance pay out for any cause of death?
Most standard life insurance policies pay out for any cause of death, including illness, accident, and suicide (though many policies exclude suicide in the first year). Some policies exclude deaths caused by specific pre-existing conditions if you did not disclose them when applying, which is why it is important to answer medical questions honestly.
Can I get life assurance if I have a pre-existing health condition?
Yes, though it may cost more or come with exclusions. Insurers assess risk individually, so the impact depends on the condition and how well it is managed. A whole-of-market broker can shop around specialist insurers on your behalf. Do not assume you are uninsurable.
How much does life assurance cost per month in the UK?
A healthy 30-year-old non-smoker can get £200,000 of level term cover over 25 years for roughly £8 to £12 a month. Premiums rise with age, smoking status, and the level of cover. The ABI recommends reviewing your cover whenever your circumstances change significantly.
What happens if I stop paying my life assurance premiums?
For term policies, your cover simply stops if you miss payments and the policy lapses. You would receive nothing and would need to reapply (potentially at a higher premium due to age or changed health). Set up a direct debit to make sure payments never accidentally lapse.
Do I need both life assurance and critical illness cover?
They serve different purposes. Life assurance pays out when you die; critical illness cover pays out if you are diagnosed with a specified serious illness (such as cancer, heart attack, or stroke) while you are still alive. Many people benefit from having both, particularly if they have a mortgage. A financial adviser can help you prioritise based on your budget.