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What is life insurance?

Life insurance helps you protect your family by providing a lump sum payment if you pass away during the policy term.

It offers peace of mind that those who mean the most to you will be taken care of if the worst happens.

A pay out from life insurance is often used to help with protecting a mortgage and keeping your family in their home, settling unpaid debts as well as covering a range of other essential living costs.

There are different options to choose from and each provider will offer different features so it’s important to shop around to find the right policy for your needs.

Why not compare fee-free quotes through The Insurance Expert? Receive quotes from some of the UK’s best insurers.

The Insurance Expert is owned by Reassured, who will provide the comparison service. Reassured are an FCA regulated life insurance broker with over 15 years of experience in the industry.

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How does life insurance work?

A life insurance policy works by providing a lump sum payment upon your death.

A common barrier to taking out financial protection policies, like life insurance, is the uncertainty about how they work.

But life insurance doesn’t need to be complicated. In fact, it can be as easy as just a few simple steps:

You’ll apply for a policy. This can be done directly through an insurer, through a comparison service or through a broker. During the application you’ll talk through your needs and reasons for wanting cover, go through your options and complete the application questionnaire.
Your application will then go through what’s known as the ‘underwriting process’. This is the process where insurers assess your application to determine what they can offer you and how much it will cost.
Once you and your insurer have come to an agreement about your policy, cover will start.
You’ll need to keep up with monthly payments (known as premium payments) in order to keep your policy valid. If you miss payments or decide to stop paying completely, your policy will become void.
If you pass away during the term of your policy, your loved ones can make a claim. This will involve contacting your insurer so it’s good to let loved ones know who you’re insured with and where your policy details can be found.
Once a claim has been accepted a payment will be made. The money will need to be paid to a UK bank account.

Life insurance [key points]

Life insurance policies are typically available to UK residents aged 18 – 86 (although exact age requirements can vary between different policies and providers)
A pay out will be made to your loved ones if you pass away during the term of your policy
Loved ones can use the money from the pay out to cover essential living costs or large expenses such as your funeral
Policies could have additional safety nets included at no extra cost (terminal illness cover) or can allow you to add extra protection to your policy for an additional cost (critical illness cover)
Popular life insurance options are level term life insurance and decreasing term life insurance. But other options such as whole of life insurance and over 50s life insurance are available too
Prices can start from 20p per day

What’s the best life insurance cover?

The best life insurance depends on factors such as what you want to cover, how long you want to be covered for and what your budget is.

The main types of life insurance are level term and decreasing term.

Both of these options are term-based which means that cover will last for a set time and will pay out if you pass away during this time.

Level term life insurance

Level term life insurance provides a fixed lump sum, meaning your chosen cover amount won’t change throughout the policy term.

It’s a popular option for helping to protect large debts and expenses such as an interest only mortgage or family living costs.

Level term life insurance key points:

Fixed pay out
Payment if you pass away during policy term
Terminal illness cover included as standard
Can be taken out on a joint basis
You’ll need to give medical information during the application

Decreasing term life insurance

With decreasing term life insurance your cover amount will reduce throughout the policy term.

It typically reduces at the same rate as a repayment mortgage, making it a popular option for covering this cost.

Decreasing term life insurance key points:

Decreasing pay out
Payment if you pass away during policy term
Terminal illness cover included as standard
Can be taken out on a joint basis
You’ll need to give medical information during the application

If the above options don’t seem right for your needs, there are other life insurance options available that can cover you for the rest of your life – paying out when you pass away, not if you pass away.

Whole of life insurance

Whole of life insurance will cover you for the rest of your life, paying out when you die.

Due to offering lifelong cover it’s often used as part of inheritance tax planning or to leave a financial gift to loved ones (in the form of an inheritance).

It’s usually a more expensive form of cover.

Whole of life insurance key points:

Lifelong cover
Fixed pay out
Pays out when you pass away, not if
Can be taken out on a joint basis
You’ll need to give medical information during the application

Over 50s life insurance

Over 50s life insurance (or an over 50s plan) is specifically designed for UK residents aged 50 – 85.

Acceptance is guaranteed and, once a policy is in place, a pay out will be made when you pass away (after a waiting period has passed).

Over 50s life insurance key points:

Lifelong cover
Fixed pay out
Pays out when you pass away (after waiting period has passed)
No medical questions during the application process

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How does life insurance protect UK families?

Life insurance helps to protect UK families by providing vital financial support.

A death in the family is a devastating event, not just emotionally but financially too.

If you’re wondering whether life insurance is right for you, consider whether your family (or other dependents) would be able to get by without you around to support them.

Not only would they need to find the funds to keep up with their usual standard of living, but they would need additional funds to cover costs associated with your passing, such as your funeral.

A life insurance pay out could help to cover:

Housing costs (such as rent or mortgage payments)
The cost of running a home (household bills such as gas, electric, water, council tax)
Family living (essentials like food and clothes as well as days out, activities and kids’ hobbies)
Additional childcare (or the pay out could allow the surviving partner to work part-time to take on the childcare themself)
Funeral costs (a funeral can be an overwhelming cost to find the money for, especially unexpectedly)
Outstanding debts
An inheritance (lighten the financial load for your loved ones by leaving them a sum of money they can spend as they wish)

Taking a few moments to secure a life insurance policy today can help to provide financial security in the future.

It’s an incredibly sad statistic but 1 in 20 children and young people experience the death of a parent by age 16^[1]. With this in mind, it’s important to take steps to protect your family should the worst happen.

How much is life insurance?

The price of life insurance will depend on your personal circumstances and the details of your policy.

During the application process you’ll be asked a series of questions about your health and lifestyle so that insurers can get a better understanding of the level of risk you pose.

It’s likely that you’ll need to give the following information:

Age
Medical history
Lifestyle factors (smoking, alcohol consumption, drug use and hobbies)
Occupation
BMI (height and weight)
Policy information (policy type, policy length and cover amount)

The pricing table below shows some example quotes for a standard applicant (this is an applicant that doesn’t smoke, is in good health and has no other high-risk factors) for a level term life insurance policy with a 20 year term and £100,000 of cover.

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When should I buy life insurance?

For many people, buying life insurance usually coincides with a big life event. Often this is buying a house, getting married or starting a family.

At these milestone moments people tend to think of the future and how they can protect themselves and their loved ones from the unexpected.

However, life insurance can be bought at any time, you don’t need to wait for a specific event to happen in order to buy a policy.

In fact, buying life insurance while you’re young and in good health can help you to secure the best price on a policy (and it could be possible to make changes to your policy later in life if your circumstances change).

Everyone goes through life at their own pace so ultimately it will be down to you and your unique needs as to when it feels right to get life insurance.

What features does a life insurance policy include?

Life insurance policies come with a range of features and benefits which can help you truly tailor your policy to your needs.

Common features included within life insurance policies include:

Feature	Description
Terminal illness cover	An extra safety net that comes at no extra cost with term life insurance. Make a claim on your policy to receive an early pay out if you’re diagnosed with a terminal illness (with 12 months to live).
Joint policy	Most life insurance policies can be taken out on a joint basis. This means that two lives are protected under one policy (for example, a married couple) and only one premium is paid between the two. It can help to save money compared to two separate policies.
Guaranteed insurability option	With this option you can make changes to your policy, without providing new medical information, if your circumstances change. For example, increasing your cover amount if you move to a bigger home and have a larger mortgage.
Separation benefit	A separation benefit allows you to split a joint life insurance policy into two single life insurance policies in the event of a divorce or separation.
Write your policy in trust	Most policies can be written in trust. This is a process that helps to detach your life insurance pay out from your estate when you die. If your pay out doesn’t form part of your estate, it helps to avoid or minimise any inheritance tax bills for your loved ones.
Health and wellness services	Many life insurance policies on the market come with health and wellbeing services, such as apps that allow you to access medical advice and appointments.

Not every policy will include all of the features mentioned above, (or some could even offer more) which is why it’s important to compare as many quotes as possible to find the right cover for your needs.

How can I compare life insurance quotes?

You could take the time to contact multiple insurers to get quotes from each one, or you could use a quote comparison service.

Using a quote comparison service allows to you explore a number of leading life insurance providers at once, saving you time and money.

Why not get quotes through The Insurance Expert?

You can compare quotes from leading insurers such as Scottish Widows, Aviva, LV= and Legal & General.

It’s a quick and easy way of finding a great deal on a policy that meets your needs.

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Top tips when buying life insurance through The Insurance Expert

Don’t delay it – it’s obviously not a decision you want to rush but the younger you are, the cheaper a policy is likely to be. For example, taking out a policy at 30 rather than 35 could equal a great saving throughout the policy lifetime.
Compare all of your options – there are many types of life insurance and each policy can be used to protect different needs and costs. It’s important to look into all the options that are available to you to get the best form of cover to suit you.
Only take out what you need – it’s only right that you’d want to give your loved ones a comfortable life if you were no longer around but it’s important to only take out a policy that covers what you need it to otherwise you could be paying for unnecessary cover.
Look into policy extras – most policies come with additional features and benefits. It’s important you explore what comes with your policy so you’re making the most of your cover. This could be writing the policy in trust or taking advantage of any health and wellbeing services that are offered.
Reach out for help if you get stuck – life insurance can seem confusing if you don’t know what you’re looking for or what policy options there are. If the information online isn’t making sense, you can always reach out to an expert who can answer your questions.

Common questions about life insurance

Common questions about life insurance:

Life insurance can be used to cover a range of daily living costs and larger expenses for your loved ones if you pass away or are diagnosed with a terminal illness.

Common uses for life insurance include:

To protect a mortgage
To cover family living costs (such as childcare, days out, food, clothing etc)
To cover funeral costs (a funeral, plus send off costs, in the UK are estimated to cost £5,140[2])
To get financial affairs in order
To provide an inheritance

In terms of the types of death covered by life insurance, you could be covered for any manner of death as long as it’s within the terms and conditions of your policy.

What doesn’t life insurance cover?

While you’ll be covered for many manners of death under a life insurance policy, there are some circumstances in which a policy won’t pay out:

If the policy includes exclusions – insurers could add exclusions to policies for applicants they believe to be high-risk. For example, for those with high-risk hobbies or occupations there could be exclusions written into your policy that it won’t pay out if you die on the job or while taking part in your hobby.
If non-disclosure is discovered – non-disclosure is a form of insurance fraud. It refers to providing false details or withholding certain information during the application process. For example, if you’re a smoker but you declare yourself as a non-smoker. If it’s discovered it will void your policy and a pay out won’t be made. This is why its essential to be 100% honest when applying for life insurance.
If you stop paying your premiums – if you stop paying your premiums, this will void your cover and a pay out won’t be made when the time comes.
If you die by suicide during the first 12 months of your policy – life insurance policies include what’s known as the ‘suicide clause’. This refers to the first 12 months of the policy where death by suicide won’t be covered. This is to prevent vulnerable people taking out cover just to get a pay out. However, once the 12 months has come to an end, death by suicide should be covered.
If the policy has expired – if your policy is term-based and the policy term has come to an end, a pay out won’t be made if loved ones try to claim.

It’s always important to thoroughly read the terms and conditions of your policy to fully understand what is and isn’t covered.

Can I cancel a life insurance policy?

Yes, it’s possible to cancel a life insurance policy if you feel it’s no longer right for your needs.

Most policies come with a 30 day cooling off period. This means if you cancel the policy during this time, you’ll get a refund of the premiums you’ve paid.

You can still cancel your policy after the cooling off period, but you won’t get a refund of premiums.

It’s important to check your policy terms and conditions regarding cancellations as they can differ between providers.

Is a life insurance pay out taxed?

No, life insurance pay outs are tax-free so they aren’t subject income tax or capital gains tax.

However, after your passing the pay out could form part of your estate (if the policy isn’t written in trust). This could make it subject to inheritance tax depending on the size of your estate (the tax-free threshold is up to £325,000).

Will I need to take a medical exam?

You could be asked to take a medical exam during the application process.

Alternatively, insurers might request to see your medical records from your GP to get the information they need.

They won’t be able to do this without your consent but it’s important to know that if you don’t give consent your application might not be able to continue as insurers won’t have a full picture of your circumstances.

Checking medical records and asking for a medical exam aren’t things that will happen with every application, it will depend on your circumstances and whether insurers feel like they need additional information to what’s been given on your questionnaire.

Can I have more than one life insurance policy?

Yes, you can take out multiple life insurance policies.

There isn’t a legal limit on the number of life insurance policies you can hold, but insurers don’t tend to let you take out more that’s what’s necessary.