What is life insurance?
Learn more about life insurance - what it covers and how it works. And find out about the benefits of Tesco Life Insurance.
Published: 20 August 2025
Life insurance: what is it, and what does it do?
Life insurance is cover that pays out a cash lump sum if:
- you die during the term of the policyyou die during the term of the policy
or
- you’re diagnosed with a terminal illness and aren’t expected to live more than a yearyou’re diagnosed with a terminal illness and aren’t expected to live more than a year
Its purpose is to give your family some financial support after you’re gone - by helping to pay off the mortgage or covering the cost of their living expenses.
If you haven’t looked at life insurance before, you can find out what some of the key terms mean in our life insurance glossary.
How does life insurance work?
Tesco Life Insurance is what’s known as term life insurance, which means it covers you for the length - or term - of the policy. And you can choose how long you want cover for, whether it’s as little as 12 months or as long as 50 years. When deciding on the policy term, it’s a good idea to 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 able to support themselves with an income of their ownwhen your children are likely to be working and able to support themselves with an income of their own
Bear in mind, Tesco Life Insurance doesn’t have a cash-in value. If your payments stop, so does your cover, and you won’t get your money back. The policy only pays out once, and it ends after that.
How much does life insurance cost?
The amount you pay usually depends on a number of things, including the type of policy you go for, how much cover you want, and a few things your insurer needs to know about you. This includes:
- 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.
- 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 typically 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 typically be higher to take this into account.
- 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.
- 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.
- 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.
- 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.
Answering the insurer’s questions
When applying for life insurance, always answer the insurer’s questions accurately and honestly. If you don't, it could affect a claim that’s made on the policy - and the insurer may not pay out.
What does life insurance cover?
Life insurance is designed to give your family some financial support in case you’re not around to look after them. What’s covered by your policy, and what’s not, depends on your insurance provider, but the basic principles are the same.
You can learn more about life cover in our guide - What does life insurance cover?
To find out exactly what you’re covered for, it’s always best to check the policy documents.
What types of life insurance are there?
Everyone has different financial needs, so Tesco Life Insurance comes with 2 types of cover to choose: Family Protection and Mortgage Protection.
Family Protection - level cover
With level cover, you choose the lump sum amount you want to leave to your loved ones and how long you want the cover for.
Mortgage Protection - decreasing cover
Decreasing cover can help to pay off a repayment mortgage, as long as your life cover and policy term match your outstanding balance and mortgage term.
If you make changes to your mortgage, like changing your fixed rate or re-mortgaging, it’s a good idea to check if your life insurance still meets your needs.
You can learn more about life insurance and mortgages in our guide - Do you need life insurance for a mortgage?
Can I choose who gets the cash lump sum?
Generally speaking, yes, but you’ll need to make the right arrangements if you want to choose who the money goes to.
For joint life insurance policies
When you die, the lump sum payment will usually be paid to the person you have the policy with, as the surviving policyholder, unless you’ve made other arrangements. If you and your partner separate after taking out a joint life insurance policy, you might be able to split it into 2 single policies.
For single life insurance policies
The cash lump sum will be paid to your estate. So, it’s important to make it clear who you want to leave the money to by choosing a beneficiary.
Choosing a beneficiary
If you want to choose the person who gets the lump sum payout, you could think about placing your policy in a Trust. The potential benefits of doing this are:
- With the policy placed in a Trust, it won’t count as part of your estate when you die. That means the money you leave to your beneficiaries is usually exempt from Inheritance Tax.With the policy placed in a Trust, it won’t count as part of your estate when you die. That means the money you leave to your beneficiaries is usually exempt from Inheritance Tax.1
- Your beneficiaries can get the money more quickly if you appoint additional trustees to deal with your life insurance policy after you die.Your beneficiaries can get the money more quickly if you appoint additional trustees to deal with your life insurance policy after you die.
You can also name the person you want the lump sum payment to go to in your will. But that might not be as tax efficient as placing your life insurance policy into Trust.
It’s a good idea to get independent legal and financial advice if you’re thinking about placing a life insurance policy into Trust or if you need to make a will.
Do I need life insurance?
Whether you need life insurance depends on your personal circumstances. If you have family who depend on you for money, like a partner or children, life insurance could help to give them some financial support if you’re no longer around to provide for them.
Payouts from life insurance can be used to help pay off mortgages, cover the costs of raising children and to pay monthly bills. So, if you don’t have any provisions in place for your family in case you die, it might be worth thinking about life insurance.
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 - Save 5% on Tesco Life Insurance with your Clubcard.Clubcard Prices - Save 5% on Tesco Life Insurance with your Clubcard.
- Your Big Win - Get a £100 Tesco gift card after you’ve paid 6 months’ premiums. T&Cs apply.Your Big Win - Get a £100 Tesco gift card after you’ve paid 6 months’ premiums. T&Cs apply.
- Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco.Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco.
As well as your Tesco benefits, you’ll also get Aviva DigiCare+ - a health and wellbeing service from Aviva that includes free annual health checks and the Bupa Anytime HealthLine.
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.
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, at no extra cost, 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.
The Big Win - £100 Tesco Gift Card
Terms and conditions
- You’ll get a £100 Tesco Gift Card once you’ve paid 6 months’ premiums, if you have a current Tesco Life Insurance policy.You’ll get a £100 Tesco Gift Card once you’ve paid 6 months’ premiums, if you have a current Tesco Life Insurance policy.
- Customers are entitled to one Tesco Gift Card per policy.Customers are entitled to one Tesco Gift Card per policy.
- We'll send your Tesco Gift Card to the email address you used when applying for your Tesco Life Insurance policy.We'll send your Tesco Gift Card to the email address you used when applying for your Tesco Life Insurance policy.
- Tesco Gift Cards should be treated like cash. Lost or stolen cards can’t be replaced.Tesco Gift Cards should be treated like cash. Lost or stolen cards can’t be replaced.
- You'll get an e-gift card, which can be used in any UK Tesco store. Please note, your Tesco Gift Card can’t be used in Tesco Petrol Stations.You'll get an e-gift card, which can be used in any UK Tesco store. Please note, your Tesco Gift Card can’t be used in Tesco Petrol Stations.
- Tesco’s change of mind policy does not apply to gift cards. If you change your mind, you can’t return your Tesco Gift Card for a refund. Your legal rights are not affected.Tesco’s change of mind policy does not apply to gift cards. If you change your mind, you can’t return your Tesco Gift Card for a refund. Your legal rights are not affected.
- Your Tesco Gift Card and balance will expire five years after the date you activated your card, or the date you last used your card, whichever comes later.Your Tesco Gift Card and balance will expire five years after the date you activated your card, or the date you last used your card, whichever comes later.
- Damaged, altered or cancelled cards won’t be accepted as payment.Damaged, altered or cancelled cards won’t be accepted as payment.
- Your Tesco Gift Card can’t be used to buy another Tesco Gift Card, or to buy other gift cards sold in-store or online at tescogiftcards.com. Your Tesco Gift Card can’t be used to buy another Tesco Gift Card, or to buy other gift cards sold in-store or online at tescogiftcards.com.
- We reserve the right to amend, modify or terminate this offer from time to time, at our sole discretion, and without prior notice.We reserve the right to amend, modify or terminate this offer from time to time, at our sole discretion, and without prior notice.
Little Life Helps - Tesco shopping benefits
Terms and conditions
- You’ll get money-off coupons to spend on your Tesco shopping for one year, starting from the date you get your first coupon.You’ll get money-off coupons to spend on your Tesco shopping for one year, starting from the date you get your first coupon.
- You’ll need to have the Tesco app on your mobile phone and be opted in to marketing.You’ll need to have the Tesco app on your mobile phone and be opted in to marketing.
- The coupons will appear automatically in your Tesco app.The coupons will appear automatically in your Tesco app.
- You'll get up to 5 Tesco coupons throughout the year, which could include £15 off your total shop and £5 off fruit & veg.You'll get up to 5 Tesco coupons throughout the year, which could include £15 off your total shop and £5 off fruit & veg.
- We reserve the right to amend, modify or terminate this offer from time to time, at our sole discretion, and without prior notice.We reserve the right to amend, modify or terminate this offer from time to time, at our sole discretion, and without prior notice.
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+.