1. What’s the difference between level and decreasing term insurance?

Level term insurance pays out a fixed sum if you pass away during the policy term, and the cover amount remains the same throughout. It’s ideal for covering family living expenses, rent, or interest-only mortgages. Decreasing term insurance, on the other hand, reduces over time—usually in line with a repayment mortgage or loan. This makes it more affordable and suited for people looking to protect debts that reduce over time.

2. Do I need a medical exam to get life insurance?

Not all life insurance policies require a medical exam. In many cases, especially for lower cover amounts or younger applicants, you’ll only need to complete a health and lifestyle questionnaire. However, if you’re applying for a high level of cover or you have pre-existing medical conditions, the insurer may request a medical exam or access to your GP records. It depends on the insurer’s underwriting guidelines.

3. What is family income benefit?

Family income benefit is a type of life insurance that pays out a regular monthly or annual income rather than a lump sum if you pass away during the policy term. It’s designed to replace your lost income and help your family cover day-to-day expenses like rent, groceries, and school fees. The payouts continue for the remaining term of the policy. It can be a more manageable way for families to receive support instead of handling a large lump sum.

4. Can I hold more than one life insurance policy?

Yes, you can have multiple life insurance policies if you wish. Many people choose to have one policy to cover their mortgage and another to provide general financial protection for their family. Holding more than one policy allows you to tailor your cover to different needs and timeframes. It’s important to ensure the total premiums are affordable and each policy aligns with a specific financial goal.

5.What happens if I stop paying my premiums?

If you stop paying your life insurance premiums, your cover will likely lapse, and the policy will be cancelled. Most insurers give you a short grace period to catch up on missed payments, but if that window closes, you’ll lose all the money paid into the policy. Once cancelled, you’ll need to reapply if you want cover again, which could be more expensive or involve additional health checks. It’s important to keep up with monthly payments to ensure your policy remains active.

6.Are life insurance payouts taxed?

Generally, life insurance payouts are not subject to income tax. However, they may be counted as part of your estate for inheritance tax purposes if not written in trust. Placing your policy in a trust ensures the money goes directly to your beneficiaries and can help reduce or avoid inheritance tax. It's a smart step for anyone with significant assets or complex family arrangements.

7. What is whole of life insurance?

Whole of life insurance covers you for your entire life, with no end date. As long as you continue paying your premiums, your loved ones are guaranteed a payout whenever you pass away. This type of policy is often used to cover long-term obligations like funeral costs or leaving a legacy. Premiums can be more expensive than term insurance, but the cover never expires.

8.Who receives the life insurance payout?

The payout from your life insurance policy typically goes to the beneficiaries you name when taking out the policy. If no beneficiary is specified, the payout becomes part of your estate and may go through probate, which can delay access. You can avoid this by writing your policy in trust, ensuring the funds go directly to your chosen recipients. This can also help reduce inheritance tax.

9.What is the difference between life insurance and life assurance?

Life insurance covers you for a specific term and only pays out if you pass away during that time. Life assurance, however, is a lifelong policy that guarantees a payout whenever you die, as long as premiums are kept up. Life assurance is usually more expensive due to the guaranteed payout. It’s commonly used for estate planning, funeral costs, or to leave a financial gift.

10.What is a life insurance trust?

A life insurance trust is a legal arrangement that allows you to specify who receives your policy payout and how it should be used. By placing your policy in trust, the money bypasses probate and is paid directly to your beneficiaries. It can also reduce or eliminate inheritance tax on the payout. Trusts are especially useful if you want more control over when and how the money is distributed.

11. What is joint life insurance and how does it work?

Joint life insurance covers two people under one policy — typically partners or spouses. Most commonly, the policy pays out on the first death, meaning once one person passes away, the policy ends. It's usually more affordable than two separate policies, but it also means the surviving partner is no longer covered. For longer-term flexibility, some couples prefer two single policies instead.

12.What happens if I live beyond the term of my policy?

If you outlive your term life insurance policy, the cover simply ends and no payout is made. You won’t receive any money back unless your policy includes a return-of-premium feature (which is rare and more costly). At the end of the term, you can choose to take out a new policy, but premiums may be higher based on your age and health at that time. That’s why it’s important to select a term that aligns with your long-term financial responsibilities.