Term life insurance is cover for a fixed number of years: it pays a lump sum if the person insured dies before the end date, and nothing if they outlive it. How it works: you choose the amount and the length of the term, pay a regular premium, and the policy ends at its expiry date or when it pays a claim.
The detail, such as how long a term can run and which deaths are excluded, is set by each insurer, so this page draws on two insurers' own documents. For a price on term cover that reflects your own age and health, send your details using the form on this page. A broker authorised by the FCA then gets in touch and can compare several insurers in one conversation, at no charge to you.
How a term life insurance policy works
Legal & General's guide to the types of cover (19 June 2026) gives the short version: "As a rule of thumb, term life insurance provides financial cover against death for a set period." Four choices shape a policy:
- The amount of cover, also called the sum assured or death benefit (see how much life cover you need).
- The term. Legal & General says it "may cover the length of a mortgage, or other life milestones like your children’s school years." Limits vary: Aviva's Life Insurance Plan policy summary (DA03008, May 2023) sets a term of anything from one to 50 years, finishing before your 91st birthday.
- One life or two. A joint policy covers two people and pays once.
- Level, falling or rising cover, the main difference between the types (see below).
The insurer asks about your health and lifestyle and prices the cover from your answers (see what life insurance costs). You then pay premiums for as long as the cover runs; Aviva's summary warns that stopping the payments ends the cover, and it keeps whatever has already been paid. Legal & General's Life Insurance terms (QGI12849, October 2026) say: "You're covered from the policy start date until the policy expiry date. Your policy will end before this if we pay the cover amount or the policy is cancelled." What happens at the end date is covered in how long term life insurance lasts.
When does term life insurance pay out, and for which causes of death?
It pays when the person covered dies during the term and a valid claim is made. Legal & General's terms say: "Life insurance will pay a lump sum if the life insured dies or is diagnosed with a terminal illness during the term of this policy. If this happens, your policy will then end."
Both policies pay for a death during the term and then set out exceptions, listed in the next section. Legal & General's claims guide (6 October 2026) puts it simply: "Life insurance is designed to payout if you die while covered by the policy."
Terminal illness. Both policies also pay early on a terminal diagnosis, and that payment is the claim. Legal & General's test is an incurable illness that your hospital consultant and its Medical Officer (a qualified doctor it employs) expect to lead to death within 12 months. Definitions differ; see terminal illness benefit.
Who receives the money. Legal & General pays the policy's owner; if the owner has died it pays their personal representative (usually the executor named in their will), and if the policy has been placed in trust it pays the trustees. It says "Once we have everything we need, we aim to pay valid claims within five days." It reports a 97.5% payout rate for its own life claims in 2025, while industry-wide figures from the Association of British Insurers put the share of individual protection claims paid in 2025 (life, critical illness and income protection together) at 97.9%. See life insurance claims statistics.
What term life insurance does not cover
Aviva's summary lists when its policy "won’t pay out", and Legal & General's terms cover the same ground. The main reasons a term policy does not pay are these.
- The term has ended. There is no payout after the expiry date and nothing comes back, since Aviva says the policy has no cash-in value (see whether you can cash in a life policy). Whether any term policy returns money is covered in term life insurance with cash back.
- The premiums stopped. Legal & General treats a policy as cancelled once a premium is unpaid 60 days after it was due, and says that if a policy has lapsed through missed payments before a claimable event, you won't be covered and the claim won't be paid.
- The application was wrong. A claim can be refused or reduced if you, or someone acting on your behalf, gave Legal & General incorrect answers to its application questions. See life insurance disclosure requirements.
- Suicide in the first year. Aviva will not pay if suicide or deliberate self-injury causes death in the policy's first 12 months, and Legal & General has a first-year exclusion in similar terms. More in does life insurance cover suicide. If you are struggling yourself, Samaritans can be called free on 116 123, any time, day or night.
- A terminal illness outside the definition, such as a prognosis longer than 12 months.
- Exclusions personal to you. "Any exclusions will be shown in the Policy Schedule you will receive after you take out cover," says Legal & General.
Legal & General's terms put the start of cover at the policy start date, subject to the first-year exclusion above. Waiting periods belong to products such as over-50s plans and funeral insurance (see funeral cover waiting periods). For declined claims and how to challenge them, see when an insurer can refuse to pay.
The different types of term life insurance
The types differ in what happens to the amount of cover. Aviva's summary describes the three it sells:
| Type | What happens to the cover | Aviva's description |
|---|---|---|
| Level term | Stays the same | Unchanged for the whole term. |
| Decreasing term | Falls, usually alongside a repayment mortgage | Falls monthly on a fixed interest rate, roughly tracking a repayment loan such as a mortgage. |
| Increasing term | Rises with inflation; Aviva's premiums rise each year with it | Rises each year with the Consumer Prices Index (CPI) when CPI goes up, by no more than 10%. |
A level payout does not keep pace with prices; Legal & General lists "Any payout doesn’t increase with inflation" among its drawbacks. Decreasing cover usually costs less, but if the mortgage rate is higher than the rate the policy assumes, Legal & General warns that the payout may not be enough to repay your mortgage in full. See level term, decreasing term and increasing term.
Extras can be added for a cost, such as critical illness cover or waiver of premium. Conversion to another kind of cover is a separate question: see converting term life insurance. Our guide to the types of policy brings the rest together.
How term cover differs from whole of life and other policies
The difference is the end date. Legal & General's guide to the two terms (3 March 2026) explains:
Life insurance is also known as term life insurance. It covers you for a set period such as 10, 20, or 40 years and only pays out if you die during that term, and a valid claim is made. If you outlive the policy, there’s no payout, which is why it tends to be cheaper.
Whole of life cover has no end date, so a valid claim will come as long as premiums are paid. The same guide says the label life assurance is usually applied to whole of life cover, though it offers its definitions only as "a rule of thumb", so the names overlap in practice. Term insurance is one kind of life insurance, not a different thing. See term vs whole of life insurance and what whole of life insurance is. Over-50s plans are, as Legal & General describes them, a kind of whole of life cover, with their own rules (see life insurance over 50), and critical illness cover pays on a diagnosis, not a death.
What term life insurance is used for, including by new parents
Term cover suits a need with an end date. Legal & General's guide to when people buy cover (4 November 2025) says many people get cover when others depend on their money, for example when they buy a property with a partner, marry, enter a civil partnership or have children. Its types guide adds that the cash sum could be used for any purpose, such as the mortgage, childcare costs, school fees or unpaid bills. Whether it is good value is weighed in term life insurance pros and cons.
New parents apply within the insurer's age limits, as anyone does (Aviva's plan takes applicants "aged between 18 and 77"). Legal & General's terms say cover may be increased after "the birth of a life insured's child" or when "the life insured legally adopts a child", without "a full application again", if the policy started before the life insured's 55th birthday and the request comes within six months. See life insurance for families.
If you are weighing an amount and a term for your household, a broker can price a few combinations side by side and say how different insurers would view your health. If that would help, start with the short form on this page.
Frequently asked questions
Is a term life insurance payout taxable for the beneficiary?
Aviva's summary says that, as things stand in the UK, nobody pays income tax or capital gains tax personally on its payouts, though inheritance tax may apply unless the policy sits in a suitable trust. GOV.UK counts life insurance payments when an estate is valued for inheritance tax. This describes how things stand in general rather than giving tax advice, and tax law may be amended; see is a life insurance payout taxable.
Does term life insurance have a waiting period?
Not in Legal & General's terms, which cover you from the policy start date, subject to the first-year exclusion described above. Legal & General's FAQ page adds one related limit: terminal illness cover can't be claimed on a policy shorter than two years.
Does term life insurance pay out if you outlive the term?
No. Legal & General's FAQs describe life insurance as protection rather than savings or investment, with no cash value unless a valid claim is made. See policies that pay out if you don't die.
When you want an actual quote for term cover, the short form on this page takes a few minutes. A broker, authorised by the FCA, will call you back, and whether to go ahead is up to you.
Sources
- Legal and General Assurance Society Limited, Life Insurance – Policy Terms and Conditions (QGI12849, October 2026), read 17 October 2026. legalandgeneral.com
- Aviva Life & Pensions UK Limited, Life Insurance Plan Policy Summary (DA03008, May 2023, linked from Aviva's life insurance page), read 17 October 2026. static.aviva.io
- Legal & General, Types of life insurance (19 June 2026), read 17 October 2026. legalandgeneral.com
- Legal & General, Life assurance vs. life insurance (3 March 2026), read 17 October 2026. legalandgeneral.com
- Legal & General, Life insurance payouts: the facts (6 October 2026), read 17 October 2026. legalandgeneral.com
- Legal & General, Life Insurance FAQs page, section on what life insurance does not cover, read 17 October 2026. legalandgeneral.com
- Legal & General, When should I get life insurance? (4 November 2025), read 17 October 2026. legalandgeneral.com
- Protection insurers pay out £7.84 billion to help customers safeguard their finances, press release from the Association of British Insurers (29 June 2026). abi.org.uk
- GOV.UK, How to value an estate for Inheritance Tax and report its value, read 17 October 2026. gov.uk
- Samaritans, Contact Samaritans, read 17 October 2026. samaritans.org