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Types of life insurance explained simply

How to tell whole of life cover from term life insurance

With life insurance comes the reassurance of knowing your family will have financial support if you were to die. In this article, we explain what life cover is and look at some of the products available here in the UK, to help you understand which may be right for you.

How does life insurance work?

Life cover works very simply. If the person who is insured dies, the policy will pay out a set amount of money to the beneficiary – most often the partner or other member of the family.

This money can then be used to maintain household finances and pay outstanding debts like the mortgage, helping to lessen the impact of a loss of income or vital parental support.

Life insurance can be taken out individually or in joint names. However, a joint policy may only pay out when the first person dies, then cover will stop, so you may want to consider each partner having their own policy.

Types of life insurance in the UK

If you think it may be time you had life cover it’s worth familiarising yourself with the different types of policies available to find the one best suited to your personal circumstances.

Term insurance

Term insurance lasts for a set number of years and pays out if the person insured dies within this time.

Term insurance can be broken down further into:

  • Level term insurance — The premium stays the same and the amount paid out also remains unchanged. People often take level term insurance if they have people that depend on them financially – like a partner or children
  • Decreasing term insurance — Usually taken out to cover the outstanding amount on a repayment mortgage. The amount paid out when you die is relative to the balance of your mortgage. So, as the balance on your mortgage decreases, so does the amount the policy will pay out. Premiums stay the same throughout the term
  • Family income benefit — Family income benefit pays out a regular, monthly cash sum to your family should the worst happen. This is to help cover the household bills and other payments until the end of the term
  • Critical illness cover — Some insurance providers give you the option to add extras to your term life insurance policy. One of the most popular is critical illness cover, which pays out if you’re diagnosed with a serious medical condition, such as cancer, heart attack or stroke

Life insurance explained - Family standing bare foot on beach


Whole of life insurance

Unlike term insurance, whole of life insurance, provides cover for the rest of your life. As long as the premiums are kept up, a cash sum is guaranteed to be paid out to the policy’s beneficiaries when the time comes.

A popular type of whole of life insurance is over 50 life insurance, which is designed to help with things like funeral costs or leaving a small nest egg as a legacy.

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, pet insurance, car insurance, home insurance, ISAs and Will writing services.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority but are registered providers with the Funeral Planning Authority.

Who provides the Funeral Plans?

The funeral services are arranged by a funeral director selected by Golden Charter Ltd. Golden Charter Ltd are not required to be authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority in relation to funeral plans but are registered providers with the Funeral Planning Authority.

If you choose to pay for your funeral in one go, with a single payment, you will have a contract with Golden Charter. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

If you choose to pay for your funeral with a life insurance policy, the policy will be provided by Phoenix Life Limited, trading as SunLife. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.