For younger people and young families, term life insurance may be the best option. This is because it is less expensive and easy to set up and manage. You can set it up like your car insurance or home insurance. When you’re younger, you have a lower risk of passing away but might also have a family to care for. This is when term insurance can make sense, covering you as a “just in case”, because you never know what could happen. When the term insurance policy runs out, you can take out a new policy if you want to ensure you still have protection. With the low cost payments, you can have more money left for other investments, savings or important day-to-day expenses.

However, whole life insurance policies can be better for some people, particularly those over 30. If you can afford to spend a bit more on your life insurance premiums, you might choose to have whole life insurance instead. One excellent reason to do so is that it will help to cut your family’s tax bill and, in particular, help with inheritance tax. You can write a whole life policy under a trust, which means a tax-free lump sum payout when you die. This can then be used to pay inheritance tax, which is charged at 40% of everything in an estate over the tax-free allowance of £325,000.

It is a good choice if you’re thinking about estate planning. It also helps to replace income when the policyholder dies, and it can be used to help pay for the care of a child or a parent when someone dies. Although the premiums are more expensive, they can stay the same throughout the policy as you get older.