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Investment-type life insurance

With investment-type life insurance you normally contribute monthly to a policy. Some policies only pay out when you die. Others pay out a cash amount on a specified date or on death. The amount paid out by investment-type policies depends on how well the investments in the insurance fund have performed.

Policies that only pay out if you die

Policies that pay out if you die, and if you don't

• with-profits bonds
• unit-linked bonds
• income and growth bonds 
• endowment policies 
• maximum investment plans 
• other life insurance which builds up a value that you can cash in

Investment type life insurance can be expensive compared with traditional investments. Find out more on the Financial Services Authority (FSA) website.

Term insurance

Term insurance is usually a cheaper way of providing protection for your dependants should you die, with the monthly payments generally being a lot lower.

The policy guarantees to pay out a set amount if you die within a stated period of time (the 'term'), but doesn't pay out anything if you survive the term. The term could be, for example, the number of years left on your mortgage or the number of years until your children are financially independent. 

Term insurance is sometimes called 'protection only' insurance.

• Life insurance - learn more on the FSA website Opens new window

How to shop around for life insurance

Whether you're buying investment-type life insurance or term insurance it's worth shopping around. Key points to consider include:

There may also be other factors to take into account, depending on the type of insurance you're buying.

'Keyfacts' documents to help you shop around

Insurance companies or brokers selling life insurance are regulated by the FSA. Under FSA rules they must provide you with standard format ‘Keyfacts’ and ‘key features’ documents to help you shop around.

These documents help you compare:

• the service they offer (advice or information only, whose products they choose from in the market and how they charge)
• the key features of any insurance policy they recommend or provide information on

• More about buying life insurance from the FSA Opens new window

How to check if a firm is FSA authorised

You can check whether a firm or individual is FSA authorised by using the FSA online firm check service.

• Use the FSA online firm check service Opens new window

The difference between information and advice

You can buy insurance after getting advice, or based on information only after shopping around. Read our related article to understand the difference between buying with or without advice and the relative pros and cons.

• Getting advice on insurance products

More useful links

• Information on consumer insurance from the Association of British Insurers Opens new window
• Main ways to save or invest your money
• Reviewing your current finances
• Inheritance planning
• Find out more about making a complaint from the FSA website Opens new window