Life insurance is sold heavily, which can make it feel like something everyone must have immediately. The truth is more nuanced: it's genuinely important for some people and largely unnecessary for others, and the deciding factor is simple — does anyone depend on your income or share your debts?
The core question
Life insurance pays out to your dependants if you die during the policy term. So the question that matters most is: if you died tomorrow, would someone be left financially worse off — unable to cover a mortgage, raise children, or manage shared debts? If yes, life insurance deserves serious thought. If you're single with no dependants and no shared debt, the case is much weaker.
When it tends to matter most
- You have children or other dependants who rely on your income.
- You have a mortgage with a partner — could they keep up payments alone?
- You have shared debts that wouldn't simply disappear.
- You're a stay-at-home parent — the cost of replacing that unpaid work (childcare and more) is easy to underestimate.
The main types, briefly
Term life insurance covers you for a set period and pays out only if you die within it — typically the cheapest and most common for protecting a mortgage or young family. Whole-of-life cover lasts your whole life and pays out whenever you die, costing more as a result. There's also the distinction from critical illness and income protection, which cover different scenarios entirely and are easy to confuse with life cover.
Don't over-insure either
Just as some people lack cover they need, others pay for more than they require, or buy it before they have any dependants at all. The goal is matching cover to genuine need — enough to protect the people who rely on you, not a policy bought reflexively. Our guide on which insurance you actually need covers prioritising across the whole picture.