Life Insurance UK 2026: FCA-Aware Independent Research

Life insurance pays a sum to chosen people if the insured person dies. It often suits those with a mortgage, children or other financial dependants. UK protection insurers paid 7.84 billion pounds in individual and group claims in 2025.

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Source: ABI, protection claims 2025, published 29 June 2026. Claims are most often declined for medical history not disclosed at application, or a condition outside the policy definition.

Which type of life insurance

Every UK life insurer must be authorised by the Prudential Regulation Authority and regulated by the FCA, and claims are protected in full by the Financial Services Compensation Scheme if an insurer fails.

Common questions

Is life insurance worth it?

Whether life insurance is worth it depends on individual circumstances. It can provide financial support for dependants if the insured person dies. In 2025, UK protection insurers paid 7.84 billion pounds in individual and group claims. For those with a mortgage, children or other financial commitments, cover may help. The right choice varies, so considering personal needs and budget is important.

How much cover do I need?

The amount of cover needed varies. It often relates to outstanding debts, such as a mortgage, and ongoing living costs for dependants. Some people consider replacing income for a set number of years. In 2025, the average individual protection claim was 19,300 pounds, but individual needs differ. A financial adviser can help assess a suitable amount based on personal circumstances.

Does it pay out?

Yes, most claims are paid. In 2025, 97.9% of individual protection claims were paid. The ABI reported that individual life insurance, income protection and critical illness policies paid 5.15 billion pounds across 258,000 new claims. Claims may be declined if medical history was not disclosed at application or if the condition does not meet the policy definition.

What is writing in trust?

Writing a policy in trust means it is usually paid outside the estate. This means it is not counted for inheritance tax and can be paid faster than waiting for probate, according to HMRC guidance. It can help ensure the money reaches chosen beneficiaries quickly. A legal adviser can help set up a trust.

Joint or single policies?

Joint life first-death policies pay once and then end, leaving the survivor uninsured. Two single policies pay on each death. The FCA's 2024 thematic review of protection distribution looked at whether commission shaped these recommendations. The choice depends on individual needs and circumstances. Considering both options with a financial adviser can help.