A safety net for the people who depend on you.

There is no single “life insurance” product — the term covers several structurally different policies. Which one is appropriate depends on what you are trying to protect and for how long.

Decreasing term assurance is the most common mortgage protection policy. The sum assured reduces over the policy term, broadly tracking an outstanding repayment mortgage balance, so the payout at any point covers what’s left. Premiums are typically lower than level term because the insurer’s exposure reduces over time. It is less suitable for interest-only mortgages, where the balance does not fall.

Level term assurance pays a fixed sum regardless of when death occurs during the term. It is preferred where the priority is providing income replacement or a lump sum for a family rather than specifically clearing a mortgage — the payout stays constant whether a claim is made in year one or year twenty-four.

Family income benefit pays a regular monthly or annual income to dependants for the remainder of the policy term, rather than a single lump sum. For families whose main concern is replacing ongoing household income rather than clearing a specific debt, this structure can be more useful — and typically cheaper per pound of cover than term assurance. It is often combined with a smaller level term policy to cover the mortgage separately.

Whole of life cover has no fixed end date — the policy remains in force for the rest of your life, and a payout is guaranteed regardless of when you die. Premiums are significantly higher than term policies because the insurer will always pay out eventually. It is not typically used for mortgage protection (which has a defined end point), but is widely used in inheritance tax planning — a whole of life policy written in a discretionary trust can provide funds to settle an IHT liability without those funds forming part of the taxable estate. It is also used to provide a guaranteed legacy for dependants or to equalise estates between beneficiaries.

Relevant life policies are arranged by a business on behalf of an employee or director. They function like a death-in-service benefit but can be set up by smaller businesses that do not have a group scheme. Premiums are paid by the company and treated as a business expense, making them tax-efficient for owner-managed businesses and limited company directors. The payout goes to a trust for the benefit of the employee’s dependants and falls outside their estate.

A life insurance policy not written in trust forms part of your estate on death. This means the payout passes through probate before reaching your beneficiaries, which typically takes several months and can take considerably longer in contested estates. During that period, your family has no access to the funds — even if a mortgage payment falls due.

Writing the policy in trust removes it from your estate entirely. The insurer pays the trustees directly, bypassing probate, so your beneficiaries can typically receive the funds within days of a claim being settled. It also means the sum assured does not count towards the value of your estate for inheritance tax purposes — on a large policy, this can represent a significant tax saving.

Discretionary trusts give trustees flexibility over how and when the funds are distributed among a range of potential beneficiaries. This is usually the recommended structure because it allows for changing family circumstances over the life of the policy — a named child beneficiary in a bare trust, for example, cannot easily be changed if family circumstances shift. Bare trusts irrevocably assign the benefit to specific named beneficiaries immediately — simpler to set up, but less flexible.

Setting up a trust is typically free of charge and done at the time the policy is taken out. Insurers provide standard trust documents, and we can walk through the trustee structure and beneficiary nominations with you as part of the advice process. If you already have a life insurance policy not written in trust, it is usually possible to assign it into trust retrospectively — something worth reviewing at your next protection conversation.

Trust arrangements interact with your estate planning and potentially with inheritance tax — we recommend independent legal or tax advice where IHT planning is a primary objective.