Life Insurance
Life insurance is an important part of any financial plan. It provides protection for your family in case something happens to you.
Learn about different types of life insurance, how much life insurance costs, and how to get cheap life insurance.
What is Life Insurance?
Life insurance is a contract between you and the insurer that guarantees your family a cash lump sum should you pass away or become terminally whilst insured. By paying a monthly/yearly premium, you can make sure your family is financially prepared should the unforeseen come to pass.
Do I need Life Insurance?
If you passed away tomorrow, would anyone be financially affected?
If not, it may be more worthwhile to look into income protection or critical illness cover.
You should consider who will pay for:
- Your loans & credit card Debts.
- Cover the mortgage or rent.
- Raising your children
- Inheritance tax
- Running your business
How will your family afford the cost of your death and the ongoing financial consequence?
People often underestimate the need for life insurance until it’s too late. We always encourage you to “Hope for the best and be prepared for the worst”
How to get Cheap Life Insurance
A lot of our clients ask, “How much does life insurance cost?”
You’ll be surprised to know that life insurance isn’t as expensive as you think, for a healthy 30-year-old non-smoker, you could spend £15 per month for £500,000 of cover over 25 years.
There are many factors that influence the cost of life insurance such as your medical conditions, age, smoking status, type of cover, Length of cover, sum assured, drug use, alcohol use and other lifestyle choices.
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For a 30-year-old smoker, you could spend £28 per month for £500,000 of cover over 25 years.
Use a Life Insurance broker
A life insurance broker can search the entire market to find the best deals for you. Most life insurance brokers don’t charge you a fee for their service, they are usually paid by the insurer and no, using a broker won’t increase your premiums.
The price of life insurance can be affected by your current & historical health, your family’s medical conditions, your lifestyle & activities, and your employment. Each insurer may charge a different price depending on what condition you have. It is life insurance advisor’s job to find you the best deals based on your circumstances.
How much Life Insurance do I need?
There are many methods to work how much life insurance you need.
- If I asked you how much you would like to leave behind for your family? this number would be infinite – however, if I ask how much can you afford a month? – there will be a limit on that. Some prefer to use their monthly budget to decide how much cover they want but you may run the risk of either over or under protecting yourself using this method.
- Some use ’10 times’ their salary, which is a great starting point but a little more thought is required to make sure your loved ones are adequately covered.
- We prefer to work this out another way. The first thing you need to do is establish what your needs are and what your wants are, we consider your needs as the ‘essentials’ which is leaving the family in the same financial position when you were alive if you passed away. Your wants are the added extras to give your family the boost they need to set them up for a successful future.
What is Term Life Insurance?
This means you’re insured for a chosen length of time. The policy will pay out the agreed sum amount if you pass away during the contractual term. You can be insured up to the age of 90 years old. Here are the following term insurance policy types.
- Decreasing term
- The amount that pays out will reduce over the term of the life insurance. This usually reduces alongside your repayment mortgage. The premiums you pay will remain the same throughout the term.
- Level term
- The amount the insurer will pay remains the same during the time you’re insured. The premiums you pay will remain the same throughout the term.
- Index link Life insurance
- You’re given the option to increase the insured amount in line with RPI inflation each year or keep the insured amount the same. The initial price is the same as a level-term policy. If you accept the increased insured amount, the premiums will also increase. If you decline the increase, the insured amount and premiums will remain the same.
- Family Income Benefit
- If you pass away during the term insured, the insurer will pay out a set amount per month for the remaining time you would have been insured for. The premiums you pay will remain the same throughout the term.
Life Insurance FAQ's
