| Main cover types | Level term, decreasing term, whole of life |
|---|---|
| Also available | Family income benefit, joint or single life |
| Typical term | Matches your mortgage or until children are independent |
| How it pays | Tax-free lump sum or monthly income, usually |
| Written in trust? | Often recommended, to speed payout |
| Underwriting | Health, lifestyle and occupation questions |
Who is this for?
- Homeowners with a mortgage to protect
- Parents with children or other dependants
- Couples who rely on two incomes
- Landlords protecting buy-to-let borrowing
- People planning for inheritance tax with whole of life cover
What does life insurance cover?
Life insurance pays out if you die during the policy term. Most policies also pay early if you are diagnosed with a terminal illness and expected to live less than 12 months. The money can repay a mortgage, replace lost income or cover family costs.
Cover depends on the information you give, underwriting and the policy terms. Not answering health and lifestyle questions fully and honestly can mean a claim is not paid.
Many insurers include extra benefits, such as free cover between exchange and completion when you buy a home, or support services for your family. These vary by provider and should not be the main reason to choose a policy.
Which type of life insurance do I need?
The right type depends on what you want to protect and for how long.
- Level term: the payout stays the same throughout. Suits interest-only mortgages and family protection.
- Decreasing term: the payout reduces over time, roughly in line with a repayment mortgage. Often lower cost.
- Family income benefit: pays a monthly income until the end of the term rather than a lump sum.
- Whole of life: covers you for life and pays out whenever you die. Often used for inheritance tax planning.
Many people combine types, for example decreasing cover for the mortgage and family income benefit for living costs.
How much life cover do I need?
A good starting point is your mortgage balance plus enough to replace your income while dependants rely on it. Subtract existing cover, such as death-in-service benefit from your employer.
Think about childcare, school fees, debts and funeral costs. Remember employer cover usually stops if you leave your job. We can help you work out a sensible figure rather than guessing.
Review your cover when you move home, remortgage, have children or your income changes significantly. Many policies let you increase cover at key life events without new medical questions, subject to limits.
Should I put my life insurance in trust?
Writing a policy in trust means the payout goes directly to your chosen beneficiaries rather than into your estate. It can speed up payment, because probate is not usually needed.
It may also keep the payout outside your estate for inheritance tax purposes. Trusts have legal consequences and are hard to undo. We can explain the insurer's trust options, but you may also want advice from a solicitor or tax adviser.
Single or joint life cover?
A joint life policy covers two people and usually pays out once, on the first death. Two single policies cost a little more but can pay out twice, and are easier to split if circumstances change.
For couples with a shared mortgage, both options are common. We will compare the cost and flexibility of each.
Separate policies can also be written in different trusts, which may suit blended families or couples with different estate plans.
What affects the cost of life insurance?
The cost depends mainly on your age, health, smoking status, occupation, the amount of cover and the term. Level cover costs more than decreasing cover, and whole of life costs more than term cover.
Guaranteed premiums stay the same for the term, so arranging cover when you are younger and healthier tends to cost less. Reviewable premiums may start lower but can rise. We compare both so you understand the long-term cost.
Why arrange life insurance through OMB?
Insurers differ in price, underwriting and how they treat medical history, hobbies and occupations. A broker can match you with an insurer more likely to offer standard terms.
We often review protection alongside a remortgage or purchase, so your cover keeps pace with your borrowing. We will also explain where critical illness or income protection may fill gaps life cover leaves.
If your application is complicated by health, travel or hazardous hobbies, we approach insurers with that in mind rather than leaving you to apply blind.
How we arrange it
- Free 15-minute call
- We review your mortgage, family and existing cover
- We compare insurers and recommend cover
- Application, underwriting and trust set-up
- Policy starts and is reviewed when life changes
Frequently asked questions
Do I need life insurance for a mortgage?
Lenders do not usually require life insurance, but it is strongly worth considering if anyone relies on you or would struggle to keep up repayments. It can clear or reduce the mortgage if you die, protecting your family's home. The amount and term can be matched to your mortgage.
Is a life insurance payout taxed?
Payouts from personal life insurance are usually free of income tax and capital gains tax. However, the payout may form part of your estate for inheritance tax unless the policy is written in an appropriate trust. Take advice on your own situation.
Can I get life insurance with a medical condition?
Often, yes. Many people with existing conditions can get cover, sometimes at standard rates and sometimes with a higher premium or exclusion. Every insurer underwrites differently, so comparing the market matters. You must disclose your medical history fully. Some specialist insurers focus on higher-risk applicants.
What is the difference between level and decreasing term?
With level term, the payout stays the same for the whole policy. With decreasing term, the payout falls over time, broadly in line with a repayment mortgage. Decreasing cover is usually cheaper but may not leave money for other family needs.
What happens if I stop paying my premiums?
Term life insurance usually has no cash value, so if you stop paying, cover ends and you get nothing back. Some policies allow a short grace period. Before cancelling, check whether you could reduce cover instead. Speak to us before cancelling, as restarting cover later may cost more as you age.
Does life insurance pay out for terminal illness?
Most term policies include terminal illness cover, which pays the lump sum early if you are diagnosed with a terminal illness and expected to live less than 12 months. Conditions apply, and cover may not apply in the final months of the policy.
Is death-in-service enough life cover?
Death-in-service benefit from an employer is valuable but usually ends when you leave the job. It may also not be enough to clear a mortgage and support a family. Many people top it up with personal cover they control. Check your employer's scheme and how many times salary it pays.
Can I get life insurance through my limited company?
Yes. Relevant life cover is a type of employer-paid life insurance for directors and employees. It can be tax efficient compared with paying personally. Take advice from your accountant about how it fits your business. Benefits are usually paid to the person's family through a trust, not to the company.
How long should my life insurance last?
Usually as long as the debts or dependants it protects, such as the mortgage term or until your youngest child is financially independent. Whole of life cover lasts for life, but costs more. We will help you match the term to your needs.
Important: Protection policies are subject to underwriting, exclusions and the policy terms. Cover is not guaranteed and will stop if you stop paying premiums. Policies have no cash-in value.