A term policy covers you for a set number of years (commonly 10, 15, 20 or 25) and pays out only if you die during that term. If you outlive it, the policy simply ends and there is no payout and no refund. That sounds harsh written down, and it is exactly why term cover is cheap: the insurer is not committing to pay out eventually, only if the worst happens inside a defined window.

There is no investment element and no cash value. It is pure protection, which is what makes it straightforward to compare and hard to get badly wrong once you have chosen the right shape and the right length.

Nearly every term policy sold in the UK is one of three shapes. The difference is what happens to the sum assured over the term, and choosing between them matters more than shaving a pound off the premium.

Level term: the payout stays the same for the whole term. Right when the need does not shrink: replacing income, an interest-only mortgage, or leaving a fixed sum behind.

Decreasing term: the payout falls over the term, roughly tracking a repayment mortgage balance. Cheapest of the three, because the insurer's exposure reduces every year.

Increasing term: the payout rises each year, usually in line with inflation. Costs more and rises over time, but protects against £300,000 meaning considerably less in twenty years than it does today.

The useful question is not "how long do I want cover for" but "when does the thing I am protecting stop existing". A mortgage has a defined end date. Children become financially independent at a reasonably predictable point. Income needs replacing until retirement, not beyond it.

Picking a term that ends when the need ends avoids paying for cover you no longer require. Picking one that is too short is the more expensive mistake: replacing cover at 55 costs considerably more than it did at 35, and any health condition acquired in between will be reflected in the price or excluded outright.

A sensible starting point is what would actually need paying for. Outstanding mortgage and debts, the cost of raising any children to independence, and enough replacement income for your household to keep its standard of living. Then subtract what already exists: death in service from an employer, any existing policies, and savings you would be content to see spent.

Most people either guess high and pay for cover they do not need, or guess low because they have not counted the income replacement. The calculation takes an adviser about twenty minutes and is worth doing properly once.

A policy written in trust pays out to your beneficiaries directly, rather than into your estate. That keeps it outside the estate for inheritance tax and means the money reaches the family in weeks rather than waiting on probate, which can take months at exactly the point the money is needed.

It costs nothing to do at the point of application and is considerably more awkward to arrange later. We set trusts up as part of the process rather than treating them as an optional extra.