What is life insurance?
Life insurance lets you leave some financial security for your loved ones if you pass away. Your family would usually get a lump sum that can help to pay off any debts, like a mortgage, as well as giving them money to live off. If you prefer, you can arrange to provide a regular income for them instead.According to the association of British insurers, 98% of life insurance claims were paid out in 2020, which equated to £17million paid every single day
Do I need life insurance?
Life insurance isn’t a legal requirement, but it can be a good idea if you have anyone that depends on you financially, like a partner or children. Life insurance can provide a financial safety net if you’re no longer around to provide for them anymore, as well as peace of mind.If you’re looking to take out a mortgage, be aware that some mortgage providers might want you to have life insurance so they know the mortgage can be repaid if you do pass away. According to data provided in an ABI news release in May 2021, accurate as of May 2021
How does life insurance work?
We offer different types of critical illness cover: level cover and decreasing cover. The type of cover you want may depend on what you want to protect, and how much you’d like to pay each month.
What your family might need?
Take time to think about how much your partner and children might need, based on their living expenses as well as any outstanding debts
Length of policy
When thinking about how long you need cover for, consider how long your children might need financial support, or when your partner might retire
Joint or single life policy
A joint policy with a partner can cover you both and be cheaper than two single policies but only pays out when the first person passes away
What your family might need?
Cover can start from just £4.741 a month. Be mindful that there are many things that can affect how much your life insurance costs though, and this is the minimum you can expect to pay.
The amount of cover
If you take out a higher amount of cover, your monthly payments are likely to be higher. Plus, the longer your cover lasts, the more you’ll pay overall
Your health and lifestyle
You could cut the cost of life insurance by making healthy lifestyle choices such as giving up smoking, drinking less or losing weight
Your age
Generally speaking, the older you are, the more expensive life insurance tends to be. This is because as you get older you have a greater chance of developing health issues
The type of policy
Level term policies are usually more expensive than decreasing term, for example, because the pay-out stays the same for the whole lifetime of your policy, as opposed to going down over time
Do I really need income protection insurance?
Check that you don’t already get income protection insurance through work. Some employers offer this as a benefit. Your employment contract, handbook or personnel department will have details if this is the case whether you have some other kind of illness insurance combined with another insurance policy or with your mortgage which covers you for serious illness whether you have savings you can use instead of insurance. However, you need to think very carefully about whether you want to rely on savings. You may not be able to save enough to cover a long period of ill-health. And you may face another emergency, which would use up your savings and leave you with no cover for illness.
Is this the best type of illness insurance for me?
Check out all the different types of illness insurance to see which one would suit you best. For example, if you’re worried about the cost of income protection insurance, you could think about taking out critical illness insurance instead which can be a much cheaper option. However, critical illness only covers a very limited range of illnesses and for a shorter period of time than income protection insurance. If you’re not sure which type of illness insurance would be best for you, you can help from an independent financial adviser. For more information about critical illness insurance, see Critical illness insurance. For more information about getting financial advice, see Getting financial advice. Do you have enough money to pay for illness insurance? The costs (or premiums) of payment protection insurance can be high and you may never need to use it. You won’t get any money back if you never make a claim.