Term life cover
Term life cover is a life insurance policy that pays a lump sum or income if the policyholder dies within a fixed term — typically 10 to 40 years. If the policyholder survives to the end of the term, no benefit is paid and the policy expires. It is the most affordable form of life insurance and is commonly used to cover a mortgage or provide for dependants during working years.
Types of term life cover
Level term
The sum assured stays the same throughout the policy term. Suits those who want a fixed lump sum — often used to cover an interest-only mortgage or provide a family income replacement.
Decreasing term
The sum assured reduces over time, typically in line with a repayment mortgage balance. Usually cheaper than level term because the insurer's maximum liability falls each year.
Increasing term
The sum assured rises annually — usually linked to inflation (RPI or CPI) — to maintain the real value of the benefit over time. Premiums are higher but purchasing power is protected.
Family income benefit
Instead of a lump sum, pays a regular income from the date of claim to the end of the policy term. Often more affordable than lump-sum term cover for the same monthly benefit.
Choosing the right term and sum assured
The term should cover your key financial obligations — at minimum until your youngest child is financially independent or your mortgage is repaid. The sum assured should be enough to clear debts and replace your income for the period your family would need support. A common starting point is 10× your annual income, adjusted for existing savings, partner's income, and outstanding liabilities.
For a detailed comparison of term and whole-of-life policies see our how insurance works guide. See also whole-of-life cover and beneficiary in this glossary.