Life Insurance covers pays you in the event of your death. Most of us have liabilities such mortgages or loans and all of us have a responsibility to other members of our family such as spouses, partners, children and parents. The last thing you would want to do is leave them with your financial burdens and worse off due to your financial commitments that have not been paid off.
What is Life insurance?
Life insurance covers pays you in the event of your death. Most of us have liabilities such as mortgages or loans and all of us have a responsibility to other members of our family such as spouses, partners, children, and parents. The last thing you would want to do is leave them with your financial burdens and worse off due to your financial commitments that have not been paid off.
There are several types of life insurance and hence it is important to understand them. It is also important to decide which aspect of the insurance is most important for you. The most popular types of life insurance covers are level term assurance, decreasing term assurance, mortgage term assurance, renewable term assurance, and family income benefit assurance.
How does it work?
Each type of life insurance works slightly differently and hence it is important to have your requirements clear before you invest into a life insurance policy. A quick overview on the various popular types of life insurances mentioned above is as follows.
Level term assurance: This type of life insurance pays out the amount insured when claimed at any time during the policy. Normally the policy premiums also remain same for the whole term. This is generally useful if you are on an interest only mortgage over a long period of time.
Decreasing term assurance: In this type of life insurance, the pay-out reduces year on year at a flat fixed fee. The policy premiums should also go on relatively. This is ideal if you have a re-payment mortgage.
Mortgage term assurance: In some instances, the decreasing term assurance may not satisfy the requirements as you may want to vary your mortgage payments every year and in such instances, the mortgage term assurance comes handy as the amount covered under this policy decreases in line with your mortgages.
Renewable term assurance: Renewable term assurance is mostly used by employers as part of the benefits to their senior management. These policies are renewed often depending on the number of people and also the benefits agreed with them. As they are for fixed short term, they tend to be cheaper as well.
Family income benefit assurance: This type of life insurance is attractive if you do not want a lump sum to be paid out in the event of your death but a regular amount of tax-free income until end of the term of the insurance. This is ideal for young families as the family of the policy holder will receive a fixed monthly income every month until end of the insurance.
It is advisable to speak to an advisor and compare quotes. Normally life insurance is a more complex decision as there are several variables to consider.
Benefits of Our Insurance
Financial Protection for Your Loved Ones
- Provides a lump sum payout to cover outstanding debts like mortgages or loans.
- Ensures your family remains financially secure even in your absence.
Reduces Financial Stress During Difficult Times
- Helps your family manage living expenses, education costs, and future plans.
- Protects your dependents from being burdened by unpaid financial commitments.
Peace of Mind with Affordable Coverage
- Life insurance offers comprehensive protection at affordable premium rates.
- Gives you confidence that your financial responsibilities are taken care of, even unexpectedly.
Untimely and premature death can happen to anyone
Life insurance can make a big difference to your family if you happen to encounter untimely death. You have a choice of how to leave your financial situation. If you want to ensure that your family do not have to carry the burden of your financial commitments and decisions, then it is prudent to take out some form of life insurance. Most types of life insurance also helps you to put your mind at rest that you have been as responsible as possible and if the unfortunate were to happen, you have done all you could have possibly done to look after your family even when you are not around. Life insurance is not something that one thinks naturally but unfortunately one has to plan for all eventualities and if you have financial commitments such as mortgages or loans then the last thing you may want is to leave it uncovered and your family to suffer when you are not around.
Life Insurance can reduce financial stress
The most common anxiety for many people is how their family will cope when they die. This is true especially if the person is the main bread winner and other people in the family are dependent on this person. However regardless of dependency, many people care for their loved ones and do not want to leave them financially worse off. Most people tend to save and work hard to ensure that their families and children are better off than themselves but unfortunately if they die prematurely with a big mortgage or loan, they will be leaving their families with a financial burden that can be challenging to fulfil. Life insurance provides a good solution as the cover will ensure that all financial commitments are paid off and the family is not burdened. This ensures that in the event of death, the family is not burdened with expensive financial commitments. There is a wide range of life insurance that is available to choose from.
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Claim Your Insurance
To file an insurance claim, contact your claim administrator immediately using the details in your policy. They’ll guide you through the process, including forms and required documents. Claims typically take around 30 days; if delayed, follow up with your insurer. For excessive delays or unfair denials, escalate to the Financial Ombudsman Service.
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Comparisons
| Life Insurance | Income Protection Insurance | Accident & Sickness Insurance | Unemployment Protection Insurance | |
| Payout Amount | Flexible | Up to 65% of your usual monthly income | Up to 65% of your usual monthly income | Up to 65% of your usual monthly income |
| Single lump-sum payout | Yes | No | No | No |
| Monthly payout | No (but Family Income Benefit pays monthly) | Yes | Yes | Yes |
| Financial protection for loved ones | Yes | Yes | Yes | Yes |
| Terminal illness cover | Yes | No | No | No |
| Flexible cover length | Yes | Yes | Yes | Yes |
| Waiting periods | No | Deferred/Excess Period | Deferred/Excess Period | Yes |
| Pre-existing condition coverage | Sometimes (depending on the policy) | No (depending on policy) | No | N/A |
Frequently Asked Questions
Your income protection insurance policy covers your income if you’re too sick or injured to work or if you’ve been made involuntarily unemployed. You agree on an amount you’d like to be paid if this happens — called a ‘benefit’ or ‘benefit amount’ — and if you find yourself unable to work, you make a claim. Your benefit will cover whatever you need it to cover, whether that’s your mortgage payments, your rent, your bills, or even your groceries.
If you successfully make a claim on your income protection insurance policy, you’ll be paid out the benefit amount you selected when you first purchased cover. This will usually be up to either 65% of your income or £2,500.
Yes, income protection insurance is worth the investment, even if you are in the UK. With an income protection insurance policy in your back pocket, you won’t have to rely on your savings, state benefits like Universal Credit (which often aren’t enough to live off of for long), or handouts from loved ones to keep your head above water in the event that you couldn’t work. Think of it like paying into your rainy-day fund; one day, you’ll need it.
What is life insurance?
Life insurance is a kind of insurance cover that’s been designed to provide financial security to your loved ones after you’ve passed away. The payout given to these loved ones – your ‘beneficiaries’ – can be used for whatever it is they need; whether that’s opening trust funds, putting money towards education expenses, covering your funeral, medical costs, or something else entirely.
With a life insurance policy, you can leave some stability for the people you care about most, even when you’re gone. Though no amount of money can ever erase the pain of losing you, with a life insurance policy, you can at least know that your loved ones will be looked after even when you can’t look after them yourself anymore.
Do I need to do a medical exam to get life insurance?
This really depends on the insurer, type of cover, and the amount you wish to cover. As a general rule, you will have to answer some questions about your health and lifestyle. These questions will be based around any medical conditions you might have, any symptoms you might be experiencing (whether those symptoms are attached to a diagnosis or not), whether you smoke, how much you drink, and much more. Once those questions have been answered, though, you’ll be able to sit back and relax knowing that your loved ones will be looked after even after you’re gone.
Can my mortgage be covered by life insurance?
Yes, your mortgage can be covered by life insurance! This type of life insurance coverage is usually referred to as ‘decreasing term life insurance’ if you have a re-payment mortgage, because the payout is linked to your outstanding mortgage loan amount, which decreases with every year that you pay it. If your mortgage is paid off before you pass away, however, your loved ones will receive no payout (because in theory, the financial obligation you wanted to help them cover will have already been taken care of), so if that’s not a concern for you, you might want to look into other kinds of life insurance.
Will I get a payout if I’m diagnosed with a terminal illness?
Most of Best Insurance’s life insurance products come with terminal illness coverage baked into the policy. What that means is that if you’re diagnosed with a terminal illness such as cancer, you can get your payout early to help handle end-of-life expenses such as medical equipment costs. If you are diagnosed with a terminal illness and decide to make a claim while you’re still alive, however, your life insurance policy will be deemed ‘complete’, and your loved ones will receive no payout once you pass away.
How do I choose a life insurance payout amount?
Figuring out how much you want your loved ones to receive once you pass away can be a difficult question to answer, not least because no one really likes to think about themselves one day dying. A good way of thinking about your ideal payout is by considering how much your monthly outgoings are, including your rent/mortgage payments, household bills, and other expenses. You want to pick a payout amount that will cover all these for a considerable time, as well as the costs of your funeral and any debts you might have left over. If you want your mortgage covered in its entirety, you should look into getting a decreasing term life insurance policy, which can be linked to your remaining mortgage amount.
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