How it works
You choose a sum assured (the payout amount), a term (10, 20, or 25 years), and pay a monthly premium. If you die within the term, your beneficiaries receive the sum assured tax-free. If you survive the term, the policy expires with no payout — you've paid for protection, not investment. This is why term insurance is much cheaper than whole-of-life insurance, which covers you indefinitely and builds a cash value.
Who needs it
The core question is: who would face financial hardship if you died? If you have a partner who relies on your income, children who depend on you, or a joint mortgage, the answer is clear — you need it. The sum assured should be enough to: clear the mortgage; provide your partner with income replacement for several years; and fund children's needs until they're independent. A common rule of thumb is 10x your annual income, though this depends heavily on your specific situation.
Decreasing vs level term
Level term pays the same sum throughout the term — appropriate if you want to protect your family's lifestyle or have interest-only obligations. Decreasing term (mortgage protection) has a payout that falls over time, broadly tracking the declining balance of a repayment mortgage — it's cheaper but provides no additional family protection beyond the property. Most people with families choose level term; decreasing term is specifically designed for mortgage debt coverage.
What it doesn't cover
Term life insurance pays only on death. It does not pay if you become critically ill (that's critical illness cover), unable to work (income protection insurance), or injured. These are separate products. For most families, the most important protection hierarchy is: 1) emergency fund; 2) income protection (pays if you can't work); 3) life insurance; 4) critical illness cover. Many people buy life insurance but neglect income protection, despite being far more likely to become unable to work than to die during their working life.
"Life insurance is not for you — it's for the people who love you and depend on you. Its only job is to make sure your death doesn't become their financial disaster."
What this means for you
If you have dependants and no life insurance, get it. Today. Compare quotes through comparison sites (comparethemarket, MoneySuperMarket in the UK) or use a broker for more complex needs. Be honest on the application — any material misrepresentation can void the claim. Write the policy in trust (a simple, free process) so the payout goes directly to beneficiaries without going through probate and potentially triggering inheritance tax. This one admin step is frequently overlooked and can save families months of delay when they're most vulnerable.