TL;DR
Life cover - key points
Life cover pays a benefit to your chosen beneficiaries if the insured person dies during the policy term.
It is commonly used to protect a mortgage, family income needs and other important commitments.
Are you afraid that your family won’t have enough to live on when you are gone? Probably everyone who has a family has felt this way at some point. To protect yourself from such problems, you can opt for term life cover.
How does life cover work in the UK?
Life cover is a product designed to provide financial security for your loved ones. In the event of the death of the insured person, the beneficiaries will receive a one-off payment. The amount is specified in the contract.
However, it is worth bearing in mind that a life cover policy has one fundamental disadvantage. Unlike whole-of-life insurance, it lasts for a set period of time, for example 20 years. Of course, this is reflected in the premiums – for the same person, they will usually be lower.
Why do I need life cover?
A life cover policy in the UK is designed to provide financial security for the people you care about most. It will enable them to adapt more easily to a new situation and cope with financial commitments. The policy can also provide your loved ones with financial stability and allow them to pay off a mortgage, pay for education or make funeral arrangements. If your partner or partner has a significantly lower income than you and you are jointly paying off a mortgage on your home, you should definitely consider such insurance.
Not everyone needs life insurance. If you don’t have a family, it will be an unjustifiable expense. However, if you have people you care about or who are financially dependent on you, seriously consider purchasing such a policy.
Life insurance policy provides support for your loved ones, even when you are no longer with them.
What would happen if you died or were ill for a long time? Would your family cope not only without you, but also without your money? Let’s not kid ourselves – unless you have a lot of savings, a sudden death can be tragic in its consequences, including financially. While you can reduce the risk of death by, for example, improving your diet or quitting smoking, you will not reduce the risk to zero. While you’re at it, it’s also worth reducing the possible adverse effects, especially those that would affect your spouse or children.
Which life cover to choose in the UK?
There are many different types of life cover policies in the UK. Each person who wants to insure themselves should find the policy that best suits their needs and individual life circumstances. Contrary to appearances, the choice is not at all that simple.
The main types of life cover in the UK include:
- Term life cover policies – these are policies that run for a set period of time. You can buy cover for 10 or 20 years, for example. Such a product is a good option for young people who do not yet have savings but would like to increase their financial security.
- Whole-of-life insurance policies – this form of insurance lasts until the death of the person who is covered. In this case, you are basically assured of receiving a payout. However, bear in mind that the monthly premiums will not be as low as with a term policy. You can find out more about whole-of-life insurance here.
- Policies for two persons (joint life insurance) – this form of policy protects a married couple or a couple at the same time.
- Life cover for over 50s (over 50s) – this is a policy aimed at people whose age is between 50 and 80. Interestingly, such products are sold regardless of the health status of the insured person, although it does of course have an impact on premiums. You can read more about it on this page.
You can find out more about life cover policies on the government’s website: What is life insurance?
Summary
The subject of insurance can be extremely complicated. Your premiums depend on many factors, and the wide range of products available makes choosing the right policy an endless task. While the final decision is always yours to make, we can help you with this. Our advisers will be happy to help you choose life cover that is tailored to your individual needs and requirements.
Don’t wait, choose advisors today who know their trade and will take care of your finances like no one else!
Frequently asked questions
Is life cover compulsory for a mortgage?
Usually no, but it is often a sensible way to protect your family and mortgage.
Can I have more than one life policy?
Yes. Different policies can protect different needs, for example a mortgage and family income.
Does smoking affect premiums?
Yes. Smoking usually increases the cost because it increases medical risk.