Understanding life insurance and income protection

Katerina Galkina · EN · 07/10/2026

Start with the financial need

List the costs your household would face if you died or could not work: housing, childcare, debts and regular bills. Check savings, employer sick pay and existing employee benefits. This identifies the actual gap requiring cover.

Do not choose a policy solely because it is offered alongside a mortgage. MoneyHelper explains that life insurance is not a general legal requirement for a mortgage ↗. Consider lender conditions and family needs separately.

Distinguish three types of payment

Life insurance pays on the insured person’s death under the policy terms. Term cover lasts for a defined period; whole-of-life cover works differently and needs separate comparison. Decide the required amount, duration and intended recipient.

Income protection replaces part of income when illness or injury prevents work ↗. It is not universal redundancy insurance. Critical illness cover normally pays a lump sum for listed serious conditions; losing income alone does not establish a valid claim.

Compare definitions and limitations

For income protection, check the deferred period, duration of each payout and definition of incapacity. Being unable to perform your own occupation differs from being unable to undertake any work. Match the waiting period to sick pay and emergency savings.

For life cover, establish whether the insured amount stays level or decreases, the policy term and whether premiums are guaranteed or reviewable. For joint cover, ask which death triggers payment and whether cover then ends. Request the conditions on overseas residence, work and travel where relevant.

Complete the application accurately

Answer medical and occupational questions precisely. If wording is unclear, request a written explanation before submitting. Concealing circumstances to obtain a cheaper premium can affect a claim.

Compare several quotations with equivalent cover, any applicable excess, exclusions and total cost. A specialist regulated adviser or broker can help with complex medical history or self-employment; ask how they are paid and which market they cover. Do not cancel existing protection before replacement cover actually begins. Review the insured amount and beneficiary arrangements after a child’s birth, mortgage change or job change.