Life savings insurance: free life cover on your savings

Many credit unions insure their members' savings at no direct cost. When a covered member dies, the family receives the savings balance plus an insurance payment linked to it, worked out according to the member's age when each deposit was made. Enterprise Credit Union describes it as "free protection on life savings and loans"¹, and Larne Credit Union offers "free Life Savings Insurance cover for all eligible members"². Dungiven Credit Union provides the same cover on savings of eligible members³.

The cover is not a product you buy. The credit union pays the premium, and the insurance is a benefit of membership. Islay & Jura Credit Union contrasts this with the banks: "Unlike bank accounts, Credit Union accounts provide free life savings insurance at no cost to the Member"⁴. Enterprise Credit Union confirms that members "receive free insurance protection on your savings and loans, subject to the policy" terms and conditions⁵.

Because each credit union decides whether to offer the insurance and on what terms, the details vary from one credit union to another. The Building Societies Association notes that most credit unions also offer free life or loan-protection insurance⁶. This page explains how the cover generally works: the age bands, the cut-off at 70, the effect of withdrawals, the limits on how much is insured, what is excluded, how a claim is made, and how the cover compares with life insurance you buy yourself. For the wider picture of what credit unions offer, see what credit unions offer.

What life savings insurance is: free life cover on credit union savings

Life savings insurance is a group policy that a credit union takes out for its members. It pays a sum linked to the member's savings balance when the member dies, on top of the savings themselves. The savings are the member's own money and would be returned to the family in any case; the insurance is an additional payment that depends on the member's age when the money was paid in and on the policy's cover limit.

The cover is described consistently across credit unions as free to the member. Mourne Derg Credit Union states plainly: "The premium for this insurance is paid by the credit union and there is no extra cost to the member"⁷. Pennyburn Credit Union makes the same point, calling it a service with "no direct cost to members... as the credit union pays the insurance premiums"¹³. Faughanvale Credit Union and Waterside Credit Union both publish the same age-band table for their members¹⁴.

Two things follow from the way the cover is structured. First, it is tied to saving: the more a member has saved while young, the larger the potential insurance payment. Larne Credit Union presents the cover as "an additional incentive to maintain savings with your Credit Union"². Second, the cover is a benefit of the credit union's own group policy, so its terms are set by that policy, not by the member. Enterprise Credit Union notes the protection is "subject to the policy" terms and conditions⁵, which means the member cannot choose the cover level or add to it.

The insurance sits alongside a similar benefit on borrowing. The Building Societies Association explains that when you borrow from a credit union you normally get free life insurance to cover the value of the loan, so the loan is repaid if you die before paying it back in full⁶. That benefit is covered separately on the loan protection insurance page. Life savings insurance is also distinct from death benefit insurance, which some credit unions offer as a small fixed payment towards funeral costs.

Not every credit union offers life savings insurance, and those that do set their own terms. If you are not yet a member, the pages on the common bond and joining a credit union explain who can join and what you need to provide.

Cover by age: 100% before 55, falling to 25% in your late 60s

The central rule of life savings insurance is that the payout depends on the member's age when each pound was saved, not the age at death of the whole balance. Money paid in before the 55th birthday is insured at 100%: as Omagh Credit Union puts it, "£1 saved before 55th birthday = £1 of Insurance: (100% cover)"¹⁶. After that, the percentage falls in steps.

The bands most commonly published are:

Mourne Derg Credit Union publishes exactly these bands, describing each as an "insurance bonus" on savings lodged in that age range⁷. Faughanvale Credit Union publishes the same table, including the 50% bonus for savings lodged between 60 and 64¹⁴. Partners Credit Union sets out the bands by age at the date of death: 75% for ages 55 to 59 inclusive and 50% for ages 60 to 64 inclusive¹². BAG Credit Union states that savings made between the ages of 65 and 79 "still receive an insurance premium, but at 25%"¹⁷, which is a wider age range for the 25% rate than the 65 to 70 band other credit unions use.

In practice this means a member's total insurance is built up deposit by deposit, with each lodgement insured at the rate for the age it was made. Someone who saved in their forties and then again in their sixties has not built the same cover as someone who saved the same amount entirely before 55. The first member's insurance would combine a 100% rate on the earlier deposits with a lower rate on the later ones. Waterside Credit Union's terms show the same structure, with 100% for savings lodged before age 55¹⁵.

Eligibility conditions can also apply. Mourne Derg Credit Union states a member is eligible for the cover if they "joined the credit union before the age of 70 years" and were "actively at work or in good health at the time of lodgements"⁷. That second condition matters: it means some deposits made during illness may not attract insurance at that credit union. Partners Credit Union notes that children's savings can also be covered for life savings¹², so the benefit is not limited to adult accounts where the policy allows.

Savings made after 70 are not insured

The age bands stop at 70, and the reason is that money paid in after the 70th birthday does not attract insurance at all. Kilkeel Credit Union states it directly: "Amounts saved after the 70th birthday are not insured"⁸. Teachers' Credit Union uses the same rule, with "no insurance payable on amounts saved after your 70th Birthday"¹⁸. Mourne Derg Credit Union, Faughanvale Credit Union, Waterside Credit Union and Camlin Credit Union all publish the same exclusion⁷.

The cut-off does not destroy cover already built up. Kilkeel Credit Union explains that "cover built up before the 70th birthday remains in force after the 70th birthday as long as the savings are left in the credit union"⁸. Pennyburn Credit Union makes the same point in slightly different words: savings made after the 70th birthday are not covered, "but savings made prior to that remain protected for life"¹³. So a member who has built substantial cover before turning 70 keeps that insurance, provided the balance stays put.

The practical consequence is that the 70th birthday is the last point at which new deposits add to the insurance. Money paid in afterwards still counts as savings, still earns any dividend the credit union pays, and is still the member's to withdraw, but it adds nothing to the insurance payment. For a member deciding where to put money in later life, that is the single most important rule of this benefit.

One credit union sets the cut-off later. BAG Credit Union excludes savings lodged on or after the member's 80th birthday rather than the 70th²⁰. This is a reminder that the age rules are set by each credit union's own policy: the 70th birthday is the common cut-off, but it is not universal. Ask your own credit union for its current terms rather than assuming.

Withdrawals can reduce the payout

Because the insurance is calculated on the savings, taking money out can reduce the insurance that goes with them. The clearest rule concerns withdrawals after 70. Faughanvale Credit Union states that "withdrawals after 70 can reduce total insurance amount"¹⁴, and Waterside Credit Union and Camlin Credit Union publish the same wording¹⁵. The reason is mechanical: cover built before 70 stays in force only while the savings stay in the credit union⁸, so a withdrawal that empties or reduces the balance also reduces the insurance attached to it.

The interaction with the age bands matters here too. If a member withdraws savings and then pays money back in, the new deposits are insured at the rate for their current age, not at the rate the original deposits earned. Money re-paid in after the 55th birthday attracts 75% or less⁷; money re-paid in after the 70th birthday attracts nothing⁸. A member who was in good health and saved steadily before 55 could therefore reduce their family's eventual payout by dipping into the savings and replacing them later in life.

This is different from how a purchased life insurance policy behaves. Life insurance bought on the open market pays an agreed sum that does not depend on a savings balance: as Which? explains, it "pays an agreed sum of money to people you choose (your beneficiaries) if you die while the policy is in force"²¹. With life savings insurance, the payout moves with the balance and with the age at which each deposit was made.

For the mechanics of getting money out of a credit union account generally, including notice periods, see getting your money out: withdrawals and notice.

Cover limits: from £5,000 to £15,000 of savings

No credit union insures an unlimited balance. Each sets a maximum amount of savings that the insurance applies to, and the limits range from £5,000 to £15,000.

Lodge Lane Credit Union states the limit in the simplest terms: "We insure the first £5,000 of each member's savings"¹⁰. Banbridge Credit Union gives its figure in both a support article, which puts the current maximum at £10,000²², and its savings page, which describes "free life cover on saving up to £10,000" subject to terms and conditions¹¹. At the other end, BDS Credit Union states "the maximum amount of savings covered by this insurance is £15,000", adding that this is subject to change and to terms and conditions²³. Omagh Credit Union advertises "free Life Savings Insurance up to £15,000"²⁴, and KRD Credit Union sets "a maximum insurable benefit of £15,000"²⁵.

SaveEasy Credit Union structures its benefit differently: it offers free life insurance for both savings and loans "up to a maximum of £5,000 each", and describes the savings payment as "up to double the value of savings up to £5,000"⁹. Under that structure the insurance can pay more than the savings themselves, up to the cap.

The limit interacts with the age bands. A member with £15,000 saved entirely before age 55 at a credit union with a £15,000 limit has the full balance insured at 100%. A member with the same balance at a credit union with a £5,000 limit has only the first £5,000 insured, whatever age they saved it at. Mourne Derg Credit Union describes its benefit simply as cover "on savings of eligible members"⁷, so the exact figure is only knowable from the credit union's own policy.

Two further points are worth noting. First, the insured limit is about the insurance, not about the safety of the savings. Savings themselves are protected separately: MoneyHelper confirms that "just like most banks, up to £120,000 per person is protected in a credit union account"²⁶. Second, the limits are stated as current figures that can change, as BDS Credit Union's "subject to change" wording makes clear²³. Check the figure with your credit union before relying on it.

What is not covered, and where protection stops

Life savings insurance has boundaries, and it is worth knowing where they sit before counting on the cover.

Deposits after the cut-off age. Money saved after the 70th birthday, or after the 80th at BAG Credit Union, is not insured⁸. Cover built earlier remains in force only while the savings stay in place⁸.

Health and joining conditions. Some credit unions require the member to have joined before 70 and to have been actively at work or in good health at the time of each lodgement⁷. Deposits made during serious illness may not attract insurance under those terms.

The cover limit. Balances above the credit union's maximum, whether £5,000, £10,000 or £15,000, are simply not insured²².

The insurance itself is not savings protection. The FSCS protection checker covers deposits, and credit unions that can take deposits appear in it²⁷. Insurance is treated differently: the FSCS lists credit insurance claims as not eligible for its protection²⁸. The group policy behind life savings insurance is the credit union's arrangement, and if the insurer withdrew, the cover would end. That has happened in this sector: a Family Protection Plan ended on 30 November 2025 when its insurer withdrew from the UK market, stopping all existing cover. Members of a credit union offering such benefits can ask what insurer stands behind the policy.

Means-tested benefits. An insurance payout, like the savings it is linked to, may affect a beneficiary's entitlement to means-tested benefits. Entitledto notes that a life insurance policy which has not been cashed in is completely excluded from savings²⁹, but a payout received after a death is money in the beneficiary's hands. Beneficiaries who receive means-tested benefits can check with benefits guidance or MoneyHelper.

Scams and fraud. Credit unions are excluded from the mandatory reimbursement policy for authorised push payment scams, as the Payment Systems Regulator confirmed in its December 2023 policy statement³⁰. That is about money lost to fraud rather than the insurance, but it is a boundary worth knowing about for anyone using a credit union account.

How a claim is made

The claim process is short, and the credit union handles most of it. Partners Credit Union states the key requirement: "In the event of a claim, the next of kin/beneficiary must provide a death certificate to the credit union"¹².

The steps are:

1. Tell the credit union the member has died. The family, the executor or the nominated beneficiary can do this.
2. Provide the death certificate to the credit union¹².
3. The credit union checks the member's savings history, applying the age bands and the cover limit to work out the insurance payment.
4. The savings and the insurance sum are paid to the person the member nominated.

Who receives the money is decided by a nomination made when joining. BDS Credit Union explains: "Upon joining the Credit Union you will nominate who you would like to leave your money to in the event of your death"²³. This nomination is specific to the credit union and is separate from a will. Members can usually update it, and it is worth reviewing after a marriage, divorce or bereavement. The nominating someone to receive your shares page explains the mechanism, and what happens to savings and loans when a member dies covers the wider process.

The family may also need to prove their own identity to the credit union. MoneyHelper notes that you usually need two recent documents to prove identity and address, such as a passport, driving licence, birth certificate, bank statement or energy bill²⁶. Having these ready can speed up the payout.

How it compares with buying life insurance

Life savings insurance is a benefit, not a substitute for a chosen policy, and the differences are worth setting out side by side.

Cost. Life savings insurance costs the member nothing directly⁷. Bought life insurance is paid for by monthly premiums throughout the term.

Cover amount. Life savings insurance is capped by the credit union's limit, between £5,000 and £15,000 in the examples above¹⁰, and reduced further by the age bands. A bought policy pays an agreed sum chosen by the policyholder²¹.

Certainty. A bought policy pays its agreed sum regardless of when the money was saved or the balance at death. Life savings insurance moves with the savings: withdrawals reduce it, and deposits after 70 add nothing⁸.

Health questions. Bought life insurance normally involves answering health questions, and Which? notes that life insurance usually pays out only when you die³¹, with premiums depending on the answers given. Life savings insurance generally has no health form, though some credit unions require good health at the time of lodgements⁷.

Choice of beneficiary. Both routes let you choose who receives the money: the credit union through the nomination made on joining²³, a bought policy through the beneficiaries you name²¹.

Bought life insurance also comes in forms that life savings insurance cannot match. Which? explains that with decreasing term insurance "the payout your family would receive... gets smaller over the term of the policy", which suits a repayment mortgage³², and that mortgage protection life insurance works the same way, with the final payout getting less over time to match the amount left on the mortgage³³. Joint life insurance pays only a single payment per policy, even if both policyholders die during the term³⁴. Critical illness cover can be bundled with life insurance, though Which? warns that a critical illness payout then reduces the later death payout³⁵.

For most members the honest summary is that life savings insurance is a genuine free benefit that adds something to savings, but its value is modest and uncertain compared with a policy chosen for a specific need, such as clearing a mortgage or replacing an income. Someone whose family would face hardship on their death can read the options on the protection insurance pages, and anyone weighing where to save can compare on credit union or bank: which suits your money.