How does life insurance work?
Learn more about life insurance - what it is and how it works. And find out what your options are with Tesco Life Insurance.
Published: 18 March 2026
What is life insurance and do I need it?
Life insurance provides cover if you die or become terminally ill with less than 12 months to live during the term of the policy. It’s a lump sum payout that offers some financial support to your loved ones when you’re no longer around. It can help to cover monthly expenses or living costs.
If you have a partner or children, you might want to get life insurance to support them after you die. If you have a mortgage, it can help your family pay off the remaining balance, so they can stay in their home.
Find out more about life insurance in our guide - What is life insurance?
How does life insurance work?
Our research shows 15% of UK adults say they don’t have life insurance because they don’t understand it.* We’re here to help.
Tesco Life Insurance is what’s known as term life insurance, which means it covers you for the length - or term - of the policy. You can choose how long you want cover for - from 5 to 50 years. When deciding on the policy term, think about things like:
- how many years you have left to pay off your mortgagehow many years you have left to pay off your mortgage
- when your children are likely to be working and can support themselves financiallywhen your children are likely to be working and can support themselves financially
Remember, Tesco Life Insurance - as with any life insurance policy - has no cash-in value. So, if your policy’s cancelled, you won’t get any money back.
What types of life insurance does Tesco offer?
Tesco Life Insurance is provided by Aviva, who will also administer your policy.
You can choose from 2 types of life insurance policy:
- Family Protection - also known as level cover. This provides your partner or children with a cash lump sum if you die.Family Protection - also known as level cover. This provides your partner or children with a cash lump sum if you die.
- Mortgage Protection - also known as decreasing cover. This provides your loved ones with a lump sum they can use to help pay off a mortgage. Mortgage Protection - also known as decreasing cover. This provides your loved ones with a lump sum they can use to help pay off a mortgage.
You can take these out in either a single or joint policy.
No matter which policy you choose, you’ll pay a premium each month. This is the amount of money you pay to keep your policy active. It makes sure your family will receive the cover amount if you die during the length of the policy.
You can learn more about the different types of life insurance here - Types of life insurance explained.
How are life insurance premiums calculated?
The amount you pay usually depends on a number of things, like the type of policy you go for, how much cover you want, and a few things your insurer needs to know about you:
- Age - the older you are, the more expensive your life insurance policy might be. That’s because, as you age, there’s a higher risk of developing a medical condition that could affect how long you’re likely to live.Age - the older you are, the more expensive your life insurance policy might be. That’s because, as you age, there’s a higher risk of developing a medical condition that could affect how long you’re likely to live.
- Health - having a pre-existing medical condition can affect the price you pay for life cover. If you have a more serious, chronic medical condition, it’ll usually mean your premiums are higher.Health - having a pre-existing medical condition can affect the price you pay for life cover. If you have a more serious, chronic medical condition, it’ll usually mean your premiums are higher.
- Family medical history - insurers might ask if your parents, brothers or sisters have ever had a serious medical condition. It can increase the cost of your policy if they have, as there’s usually a greater risk of you suffering from the same condition.Family medical history - insurers might ask if your parents, brothers or sisters have ever had a serious medical condition. It can increase the cost of your policy if they have, as there’s usually a greater risk of you suffering from the same condition.
- Smoker status - if you’re a smoker, you can expect to pay more for life cover than a non-smoker because of the associated health risks. This also applies if you use nicotine replacement products or vapes.Smoker status - if you’re a smoker, you can expect to pay more for life cover than a non-smoker because of the associated health risks. This also applies if you use nicotine replacement products or vapes.
- Lifestyle - having an unhealthy lifestyle can mean you’ll pay more for a life insurance policy. For example, drinking too much alcohol or being overweight can shorten your life expectancy, so your premiums will usually be higher to take this into account.Lifestyle - having an unhealthy lifestyle can mean you’ll pay more for a life insurance policy. For example, drinking too much alcohol or being overweight can shorten your life expectancy, so your premiums will usually be higher to take this into account.
- Occupation - if you have a dangerous job, you might have to pay more than someone who works in a low-risk job, like an admin role.Occupation - if you have a dangerous job, you might have to pay more than someone who works in a low-risk job, like an admin role.
- Length of cover - life insurance policies with longer terms can be more expensive than ones with a shorter term.Length of cover - life insurance policies with longer terms can be more expensive than ones with a shorter term.
- Amount of cover - you decide how much you’d like to be covered for. In most cases, the higher the cover, the higher the premiums will be.Amount of cover - you decide how much you’d like to be covered for. In most cases, the higher the cover, the higher the premiums will be.
Tesco Life Insurance premiums start from just £5 per month. And you’ll get a discount with your Clubcard.
Find out more about the cost of life insurance in our guide - How much does life insurance cost?
What is term life insurance?
Term life insurance pays your estate a set amount if you die or become terminally ill with less than 12 months to live during the policy term.
You pay regular premiums to your insurer, usually every month, for the length of the term.
You can find out what key terms mean in our life insurance glossary.
What is decreasing term life insurance?
Decreasing term life insurance is designed with mortgages in mind - that's why we also call it Mortgage Protection. But you can use it for other things too.
The amount you’re covered for goes down each month, alongside the outstanding balance on your mortgage. As the cover isn’t tied directly to the mortgage amount, the value of the policy may be different from the value of the mortgage.
This might make it cheaper than other types of life insurance because the lump sum payout reduces as your mortgage goes down. However - your premiums never change. So, you’ll pay the same amount each month until the end of the policy.
With 30% of UK adults admitting they would have to sell their family home if their partner died, Mortgage Protection helps to provide peace of mind.*
Learn more about decreasing term life insurance here - What is decreasing term life insurance?
What is level term life insurance?
With level term life insurance, also known as Family Protection, your premium and the amount you’re covered for stay the same throughout the policy term.
You can also choose to protect your cover from the effects of inflation. If you decide to do that, your lump sum payment will increase in line with rising prices. Your monthly payments will also go up to pay for the higher cover.
It’s designed to give your family some financial support after you’re gone - which is why we call it Family Protection.
The cash lump sum can be used to help pay off the mortgage, cover living costs or go towards university fees. It can also be used to pay for your funeral.
Learn more about term life insurance here - What is level term life insurance?
What type of life insurance should I get?
It all comes down to your own individual circumstances and what you want the cover for. There’s no right or wrong type of life insurance, and, if you want, you can have more than one type of policy at the same time.
Find out more about having multiple life insurance policies here - Can you have more than one life insurance policy?
Should I get a single or joint life insurance policy?
At Tesco Life Insurance, both Mortgage Protection and Family Protection can be taken out as a single or joint policy.
A single life insurance policy is cover for one person only. It pays out a lump sum after that person dies, and there’s no cash-in value at any time.
A joint life insurance policy covers two people on one policy and can be cheaper than buying two policies. You’ll also only have one monthly premium to pay.
Like the single policy, a joint life insurance policy only pays out once. The cover ends after the first death of a policyholder. So, while it might be a cheaper option, a joint policy will leave one partner without any cover after the other dies.
Why get Tesco Life Insurance?
At Tesco Insurance, we want to help you with the things that matter most. That’s why Tesco Life Insurance comes with a Big Win and lots of Little Helps.
- Clubcard Prices – Get an exclusive discount on Tesco Life Insurance with your Clubcard.Clubcard Prices – Get an exclusive discount on Tesco Life Insurance with your Clubcard.
- Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3 year minimum term. T&Cs apply.Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3 year minimum term. T&Cs apply.
- Your Little Helps - Get a full year of coupons in your Tesco app to help you shop at Tesco. Available on policies with a 3 year minimum term, Clubcard app required and must be opted in to Tesco marketing. T&Cs apply .Your Little Helps - Get a full year of coupons in your Tesco app to help you shop at Tesco. Available on policies with a 3 year minimum term, Clubcard app required and must be opted in to Tesco marketing. T&Cs apply.
Tesco Life Insurance is provided and administered by Aviva, who have a 5-star rating for life insurance and pay out on 98.8% of claims**.
About our research
*All figures are taken from an online survey conducted by WALR on behalf of Tesco Insurance between 11 and 25 July 2025. The survey included a sample of 2,008 UK consumers under 55 years of age.
**Aviva 2025 Claims report, covering claims made across all life insurance policies in 2024.
Important information
About Tesco Life Insurance
Tesco Life Insurance is arranged, administered and underwritten by Aviva Life & Pensions UK Limited.
Tesco Personal Finance Ltd acts as an introducer to Aviva Life & Pensions UK Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of the Association of British Insurers. Firm Reference Number 185896.
Aviva Life & Pensions UK Limited. Registered in England & Wales No. 3253947. Registered Office: Aviva, Wellington Row, York, YO90 1WR. Tesco Personal Finance Ltd and Aviva Life & Pensions UK Limited. are not part of the same corporate group.
About Tesco Insurance
Tesco Insurance is a trading name of Tesco Personal Finance Ltd, Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ (registered in Scotland, no SC173199) which is authorised and regulated by the Financial Conduct Authority (register no. 186022).
Aviva DigiCare+ app
With the Aviva DigiCare+ app, you can start using a range of health and wellbeing services when you take out your policy.
Members of your family can use it too, as long as they're eligible.
The Aviva DigiCare+ app is provided by Square Health. The services are provided by Square Health and other selected partners.
You'll find full details about the services in the app, along with the terms and conditions, residency restrictions and privacy policy.
Aviva DigiCare+ is a non-contractual benefit that could be changed or withdrawn by Aviva at any time. So, it won't appear in any contract you've signed, or in any terms and conditions.
Life Insurance policy booklets
Please check the policy documents to make sure the cover you’ve chosen meets your needs.
The policy booklet and product information documents tell you about the benefits, limitations and exclusions that’ll apply to your cover.
Tesco Life Insurance is provided, administered and underwritten by Aviva Life & Pensions UK Limited.
Aviva have a 5-star rating for life insurance from Defaqto. And they pay out on 98.8% of life insurance claims*.
*Aviva UK individual claims report 2025, based on claims paid in 2024.
Learn more about Life Insurance
Find the right cover to give financial support to your family after you’ve gone. Tesco Life Insurance comes with Clubcard Prices, some great Tesco shopping benefits and Aviva DigiCare+.