Life insurance pays out a cash sum when you die or are diagnosed with a terminal illness.

Life insurance policies are arranged to help those most important to you cope with the financial pressure of losing a loved one. There are various forms of cover, suiting all sorts of needs.

There are many valuable reasons why people take out life cover the three main reasons are:

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To repay the mortgage

Your home is usually the largest investment you will make, and life insurance is a great way to ensure that it is properly protected.

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To provide for their family

Life insurance can help insulate your family from the financial impact resulting from your death

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To pay for funeral costs

Funerals are often a forgotten expense, but nowadays one typically costs around £4,383*
*Money Advice service – annual Sunlife cost of dying report 2020

We search over 20 market-leading insurance providers in order to get you the right cover at the best price

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Life events are often unexpected. It is all too easy to think that the worst won’t happen to you in life. Sadly, regardless of age, even the healthiest of people can suffer an accident.

If the worst happens, life insurance provides you and those closest to you with financial security. At Future Proof we never use jargon, only plain English so that you can make clear, informed decisions. Here we discuss what life insurance is, how it can help and what you need to be aware of. 

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What is life insurance?

Life insurance is a type of insurance policy that protects those most important to you. It will provide your family with financial support should you die within the term of the policy.

Life insurance pays out a lump sum of cash that can be used to pay off debts, like a mortgage, and to cover your family’s monthly living expenses.

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How does life insurance work?

A life insurance policy pays out a lump sum if you die or are diagnosed with a terminal illness and are not expected to live longer than 12 months.  A life insurance policy is not a savings or investment product. Life cover has no cash in value at any time. If you stop making your monthly insurance payments your cover will end and you won’t get anything back.

Future Proof Insurance Process

Our qualified advisers will help you agree on an amount of cover. Think about the people who depend on you, based on living expenses and debts, if you’re no longer there to provide an income. 

Your adviser will help you to decide which type of policy is most fitting for your circumstances. Some policies will only pay out if you die within a fixed time period, some pay the same whenever you die, while with others the pay-out decreases or increases over time. Consider how long you need your policy to last too. 

We will help you ensure that the money goes where you want it to. Decide who you want to receive the money on your death. Could it help your partner pay off the mortgage or keep up with the rent and household expenses, or help you leave something to your children? 

Life insurance frequently asked questions

  • Life insurance is not required by law, but it is a good idea if someone is financially dependent on you, such as a partner or children.

    It can provide your loved ones with a financial safety net if you’re no longer around to provide for them anymore. It also provides peace of mind.

  • There are a number of reasons why you should consider taking out a life insurance policy. Some of the most common reasons to get life insurance include: 

    • Mortgage
    • Loan cover 
    • Funeral care
    • Starting family 
    • Covering inheritance tax
    • Moving house – remortgaging
    • Leaving a gift to family members

     

    Most financial experts recommend you take out insurance before you reach 35. After this age it is likely that both premiums and health conditions will rise.

     

    If you wait too long to buy insurance, you may have to pay higher monthly premiums. Your choice of cover may also be limited, especially if you begin to suffer from medical conditions associated with ageing.    

     

    The younger you apply for a life insurance policy the more likely you will be locking in lower premiums compared to applying in later life.

     

    Whilst it is more cost-efficient to get life insurance whilst you are young, more often than not life circumstances will often determine whether you need insurance. These circumstances will determine if life insurance is essential.

  • Life Insurance policies can be taken out on a single basis for one individual. Or, a joint life basis, for two people, depending on your requirements. A ‘joint’ life insurance policy is one plan that covers two lives, but the insurance will only be paid out on the ‘first death’. After the claim is paid the policy would end.

  • Looking for the ‘cheapest premium’ for life insurance does not always provide the best cover. The cheapest insurer may raise your premium by the highest amount after assessing your medical history or lifestyle.

    An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.

  • There is no such thing as a ‘best’ life insurance plan as each individual has a different set of circumstances and needs. 

    For more information on which cover is right for me this link takes a look at the common life events that prompt consumers to seek out life cover: What cover is right for me?

  • A life insurance quote is essentially an estimate of a premium payable for a life insurance policy. It will be based on simple personal information you have provided. An exact quote can be obtained after an insurer has your full personal details including medical history.  A quote is not an offer of insurance, the offer will come after the insurer has assessed your application.

    Our expert advisers will obtain exact quotes for you by contacting multiple insurers. You won’t have to repeat yourself many times and we will report back with the most competitive premiums and comprehensive insurers.

Will I get a cheaper quote online or through Future Proof?

If you have a pre-existing medical condition, high risk job or take part in any dangerous hobbies, a quote that your Future Proof adviser provides you with will take into account your circumstances and budget. A quote online may seem attractive, but it is at the application stage when the price could change owing to the aforementioned points. 
We can find you the most cost effective taking into account your personal circumstances.

Future Proof have buying power and close relationships with Insurance underwriters. We can discuss any premium increases with them and try to find a way to minimise these if possible.

What’s more, our advice comes at no obligation and with no hidden costs.  You don’t pay us directly, but we get paid by the insurer if you decide to start a policy with them.

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What affects the price of life insurance?

There are many things that impact the price of life insurance premiums. Here are the most common things that affect the price of life cover:

  • Put simply, the older you are, the more you will pay for a life insurance policy. That’s because you are thought to be more of a risk to an insurance provider. The older you are the higher the risk of passing away while your policy is running. 

    The younger you are when you arrange life cover, the lower premiums you’ll pay. With most life policies, these premiums will remain fixed throughout the lifetime of the policy.

  • If you are substantially underweight, overweight or obese arranging life insurance on your own can be tricky. It can often result in the premium you were originally quoted being increased (loaded) once the application has been assessed. In some cases, the application can be declined. 

    The purpose of an increased premium is to reflect the increased risk of an early claim that the insurer is accepting.  

    An insurer will assess an application part of their process may include them writing to the GP for a medical report. Or, asking you to attend a short medical assessment (which the insurer pays for).

  • In order to assess how much life insurance you need, your Adviser will ask you the following questions:

    • Mortgage – How much is outstanding? What is the remaining term of the mortgage?
    • Rent – How much rent do you pay per month? Also, consider how much your rent may increase in the future
    • Debts – What is the total amount owed and over what term?
    • Outgoings – regular monthly bills such as travel costs, utility bills, council tax, school fees, maintenance payments perhaps?
    • Family – How many children/dependents do you have? How old are they? And how long do you feel they will be dependent upon your income/care?

     

  • Sadly, there is nothing that any can do about their family’s medical history. If heart disease, strokes, cancer, and other serious conditions run in your family, your risk of developing these conditions can be raised. 

    There are some insurers that place a higher emphasis on your family’s health than others. We can find the most accommodating one according to your circumstances.

    An insurer is usually interested in any conditions that have affected your parents or siblings and have led to an early death.

    It will be likely that family history will have some impact on your premium.

  • If your favourite pastime involves a higher than usual risk to your life like rock climbing, scuba diving or flying light aircraft. Then you might have to pay higher premiums for life insurance. If you take part in high-risk activities, it raises the risk to your life and therefore the risk of insurers paying out early.

     

    -Smoking puts you at a higher risk for all sorts of health conditions. Smokers pay more than non-smokers for equivalent coverage. 

  • Every life insurance provider has a list of pre-existing medical conditions that may affect your life insurance premium. Some of the most common conditions include:

    • Cancer
    • Arthritis
    • Diabetes
    • Obesity
    • Asthma
    • Cholesterol
    • Mental health conditions
    • Heart disease / high blood pressure

     

    Depending on your pre-existing medical condition, insurers will need to know if you’ve had a health issue in the past – whether that is recently, or at any point in your life.

  • In order to assess how long your life policy is best to run for, your Adviser will ask you:

    • How long is the term of your mortgage?
    • What is your expected retirement date?
    • Do you have any outstanding loans – over what term are they?
    • How many years do you think your children will be dependent on you?

     

    The answers to these will help determine the length of the life insurance policy. What we want to avoid is the term ending too early whilst the need for life insurance is still there. Re-applying for insurance at an older age will mean you paying a higher premium over an extended term.

  • The nature of some occupations mean that they are more dangerous than others.  If you work in a job that’s high-risk, it could mean that you will end up paying higher premiums. For example roles that include diving, overseas business travel, and working at heights and some military roles . It is a factor we look at when comparing quotes. 

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Do I need life insurance for a mortgage?

Life insurance to protect a mortgage is not a legal requirement. Some mortgage  lenders, prefer borrowers to have life insurance in place before lending. 

If you were to pass away, the mortgage would be paid off immediately, leaving your loved ones with their own home and the mortgage company debt-free. Mortgage protection makes sense, especially as taking out a mortgage is often the largest debt most people will acquire.

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What does life insurance cover?

The benefits of a life insurance policy do not stop at just a payout once you die. Life insurance can also cover a broad range of conditions and life events. There are also different types of associated products and benefits.

  • Life insurance pays out a cash sum if you die or are diagnosed with a terminal illness during the term of your policy. Nearly all life insurance policies will include Terminal Illness Cover as standard. This means that if you are given less than 12 months to live during the term of the policy, most insurers will pay out the sum assured while you are still alive.

    Terms and conditions vary between insurers, and we can advise on these. Terminal illness cover is not to be confused with Critical Illness Cover. Take me to Critical illness cover

     

  • Waiver of premium – Is a benefit which is an add-on. Simply, the insurance company will pay your premiums if you are unable to work for a period of time due to accident or sickness. 

    It can be added to your life insurance policy for a nominal price. Waiver of Premium is only available if you are employed, and usually only until you reach 65.

  • Index Linked cover – Arranging cover with an index-linked option means the amount insured by the policy increases on an annual basis. This is to offset the effects of inflation and is important because as time goes by, the real value of the pay-out will decrease. It is safe to say that £100,000 today will not be worth the same in 20 years. In 1982 the average price of a litre of petrol was 35p, by March 2022 it is around £1.65. 

    Index-linking your Life Insurance policy will allow it to maintain its value over time. It is important to note that premiums will increase annually. Most providers allow you to opt-out of indexation. This means you can freeze your premiums and sum assured at any point, even temporarily.

  • Critical Illness Cover can be included in a life policy. It is more expensive than basic life cover, but provides you with much more protection.

    It will pay out a tax-free lump sum in the event of being diagnosed with any of the critical illnesses covered under the terms of the policy. There can be vast differences between insurers’ policy terms, so it really does pay to take some advice. 

    When adding critical illness cover, there will be one pay out. On death or the diagnosis of a critical illness whichever happens first. Take me to Critical illness cover

What does life insurance not cover?

Here are some occasions when life insurance will not provide cover:

  • If you stop paying the premiums
  • Death by drug or alcohol abuse – dependent on the insurer
  • Dying whilst taking part in a criminal offence – dependent on the insurer
  • Total disability – often included within a critical illness policy only
  • Suicide if you are within the first 12 months of the policy start date
  • If you cancel your policy, you’ll no longer be covered and your family no longer protected.
  • Critical illness – these conditions are covered with a separate critical illness policy which we can advise on
  • If you’ve taken out term life insurance and you outlive the term, no payout will be made. You will then need to find new cover to protect you for the remainder of your life. Our advisers will find the most appropriate length of cover for your needs to avoid this scenario and keep premiums affordable at outset.

Every policy differs in its terms and conditions.

How many life insurance claims are paid out in the UK?

According to the Association of British insurers (The ABI is a trade association that represents more than 200 insurance companies), 97% of life insurance claims were paid out in 2021. This equated to a total pay out value of £3,870,633. Data provided in an ABI news release in May 2022.

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What are the main types of life cover?

There are different types of life cover policies which can give you lump sum payments. Or, a regular monthly income (if you have family income benefit). 

Level term life insurance is where the premiums and amount of cover stay the same during a policy term. In other words, the amount of cover is ‘level’.

  • This type of policy can help your family meet various ongoing living costs if you die.
  • Can be used to pay off an interest only mortgage

 

Decreasing term Life Insurance is a type of insurance that’s designed to help protect a repayment mortgage. 

The amount of cover reduces roughly in line with the way a repayment mortgage decreases. Premiums stay the same during the length of the policy.

A cash sum would be paid out if you die or are diagnosed with a terminal illness with a life expectancy of less than 12 months, while you’re covered by the policy. 

This could be a suitable option giving you peace of mind that your family can continue living in their home if something happens to you. 

The simplest way to describe increasing term cover is a life insurance policy whereby the amount insured increases by the amount of inflation each year. As the sum insured increases, your premium will also rise to reflect the increased benefit.  Arranging increasing cover with an ‘index-linked option’ will help to offset the effects of inflation.

Most policies can be arranged to increase in line with the retail price index, or in the case of some insurers, by a specific percentage eg 5 per cent per annum.

You only have to look at your weekly shopping bill or the cost of fuel to see how prices have increased over the years. We recommend index linking to maintain the value of the amount you insure.

If you should change your mind:

Most providers allow an ‘opt-out’. You will receive a letter from your insurance company every year informing you of your new premiums and benefits for the following year. At this stage, you can opt-out of the indexation, and your premiums and benefits will be frozen at their current levels.

Family income benefit, or FIB, is a type of life insurance policy. Where it’s different from standard life insurance is that it pays out a regular monthly income, rather than a lump sum. It can be used to cover spousal maintenance payments, provide money for the monthly bills or payments for school fees.

 

Whole-of-life insurance is a type of life insurance policy that guarantees to payout a lump sum whenever you die.  

 This is in contrast to level/ decreasing or increasing term life insurance. Which only guarantee that there will be a pay out should you die within the specified term of the policy. 

 The premiums for Whole of Life Insurance policies tend to be more expensive than those of Term policies, as they are guaranteed to pay out. 

The actual cost of your whole-of-life insurance policy will come down to a host of factors about you, such as how much cover you want, your age, your health and your lifestyle.

If you cancel or stop paying your premiums, you won’t get any money back. There is no investment value in the Whole of Life Insurance policies that we arrange.

Why do people choose Whole of Life policies?

There are many reasons why people choose whole of life policies. Not least because they are guaranteed to pay out whenever you die. They can be used to:

  • Cover their funeral costs or to leave a lump sum for family
  • A Whole of Life policy could be used to help cover a potential Inheritance tax liability (IHT)* 

Upon death, (IHT) is paid on any part of your estate that exceeds £325,000 (or, £650,000 for couples). These levels are called the ‘nil rate band’ up to these amounts no IHT is payable. 

The current rate of IHT is 40%. *The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances. 

A guaranteed over 50’s plan is a Whole of Life Insurance plan that pays out a cash sum when you die. Sometimes it is also called Life insurance for seniors.

Acceptance is guaranteed, with no medicals or health questionnaires to complete; quite simply you will be covered regardless of any health issues you may have, as long as you are between the ages of 50 and 80*. 

 A guaranteed over 50’s plan can leave money to those you care about, giving them the flexibility to use it in a way that suits them:

  •  Help with funeral costs
  • Pay off outstanding debts or bills
  • Leave as a gift for grandchildren

If you have any questions…

What are the benefits of a guaranteed over 50’s plan?

  • Guaranteed acceptance – you will be covered regardless of any health issues
  • No medical or health questions to answer – just a straightforward simple application
  • Affordable monthly payments – starting from £10
  • Fixed monthly payments – can help with budgeting
  • Available to anyone in the UK between the ages of 50 – 80*
  • Guaranteed cash sum when you die – that can be used to help your family financially
  • You choose how much you want to pay on a monthly basis or how much cover you need
  • Full life cover after an initial period of 2 years* – if you die within this period the money paid in will be refunded

What are the downsides of a guaranteed over 50’s plan?

  • These types of plans are normally more expensive than a medically underwritten Whole of Life plan
  • If you were to die during the initial 2-year period*, you would not be covered for the full cash sum however, one and half times your paid monthly premiums would be refunded.
  • Depending on how long you live, there is a chance you could pay in more than the plan pays out
  • The amount of money paid out when you die is fixed so inflation will reduce its value over time
  • If you cancel or stop paying your premiums, you won’t get any money back
  • The money usually gets paid to your estate so may be subject to inheritance tax, unless you place your policy in a Trust
  • Premiums are payable for 30 years until you pass away or until your 90th birthday* whichever is sooner

* Plans vary depending on the life insurance provider

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How much is life insurance?

Everything you need to know about the cost of life insurance. Including all the factors that will mean you will either pay more or less depending on your own circumstances.

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What questions do I need to answer to get a life insurance quote?

To give the insurers a good idea of the risk they will be accepting our advisers will ask you for the following information:

  • Your age
  • Whether or not you smoke
  • Your height and weight ie Body Mass Index
  • How many units of alcohol do you drink in a week?
  • Have you ever experienced any mental health issues?
  • Do you undertake a lot of business travel overseas or mileage?
  • Whether or not you have used any form of recreational drugs in the last 5 to 10 years
  • Is there a family history of serious illness before the age of 65 years (parents and siblings)?
  • Do you take part in any hazardous pursuits? Eg diving, rock climbing, sailing, motor racing?
  • Do you have a high-risk occupation? Eg working at heights, in dangerous countries, at sea?
  • Whether or not you have any pre-existing medical conditions such as diabetes, high blood pressure or Arthritis

How do I compare life insurance quotes?

Comparing life insurance quotes isn’t as simple as choosing the cheapest premium. There are other considerations:

  • What percentage of claims does the insurer pay out?
  •  How comprehensive is the policy compared to others on offer?
  • What additional benefits does the insurer offer included in the premium?
  • Are there any conditions placed around the payment of terminal life insurance?
  • Is there anything important to know in the small print, which might affect a claim?

A simple quote at the beginning will not consider your medical history. After the insurer assesses your application form , your premium may rise. We identify which insurers are best suited in terms of medical history or unusual hobbies making your choice clearer.

At Future Proof we have up to date knowledge of all insurers in the UK, including specialist providers which the general public cannot access directly.

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More frequently asked questions by our clients

  • In short, yes. There are many types of life insurance policies that cover different types of insurable interests. In insurance law, you can only buy insurance for someone in which you have an insurable interest. I.e., you will suffer a loss if that person whom you rely on dies.

    For example you could have one life policy to cover each insurable interest below:

    • your mortgage
    • protect your family that covers their bills
    • cover a loan that will need to be repaid upon death
    • cover private school fees 

      In the application, you will be asked the question: 

    Does the total amount of insurance cover you’re applying for, added to the amount you already have, across all insurance companies, exceed:

    • £1,000,000 life cover or
    • £500,000 critical illness cover?

    This question is to ensure that you are not over insured.

  • Life insurance policies are all designed to pay out upon the death of the life assured. Certain aspects of additional benefits attached to life insurance policies are not the same though.

    Where life insurance policies are different between insurers

    • Service -Insurers are not the same from the ongoing service they provide to the percentage of claims paid.
    • Additional Benefits -Most insurers provide additional benefits which are included within the premium. These vary greatly and are considered a huge plus point to purchasing a policy that you will never personally reap the awards from. Benefits such as Private virtual GPs for your family, nutritional support, mental health support or Best doctors who will give a second opinion on diagnosis. Plus many more. Many of our clients agree to pay a little more to access benefits that are important to them.
    • Terminal Illness cover – There are many factors that differ between insurers when it comes to terminal illness cover. The small print will determine when a claim can be made and when it won’t. It is important to know what your insurer offers.

    We have access to software that compares ten different areas of quality across insurers. Including claims processing and additional benefit access. Giving you peace of mind that you have chosen knowledgeably.

  • Yes, spousal maintenance payments can be insured. Meaning that if the spouse making the maintenance payments died, you would still receive income in the form of a monthly insurance pay out.

    If an ex-spouse pays regular maintenance, the payments will cease if they die. A life insurance policy can be set up on a ‘Life of Another’ basis. The person paying maintenance is insured, and the policy is legally owned by the person receiving maintenance. If the person paying maintenance passes away, the policy proceeds are paid to the policy owner, thereby replacing the maintenance payments.

    Maintenance cover insurance is usually set up as a Family Income Benefit plan. Which means that the claim payment is issued in regular monthly payments just like the maintenance payments. With monthly payments Family Income Benefit is usually much cheaper to buy than level term. 

    It is important to note that either person can be responsible for covering the monthly premiums. It is vital though that you must have the ex-spouses permission to take out the cover on their life ( Life of another). They might also be called to carry out a medical examination depending on the amount to be insured.

  • There is no one insurance company which is best. Each individuals’ circumstances vary. The ‘best insurer’ is the one that provides the most comprehensive policy, with the most useful additional benefits at an affordable price for you.

     Future Proof works with the majority of known major insurers and has access to specialist insurance companies that don’t deal directly with the public.

  • You can cancel a life insurance policy at any time. You will not be charged a cancellation fee. If you are feeling the squeeze with income, in the current economic climate you are not alone and help is at hand.

    There are many things we can do to help ease your financial worries without shifting the focus of your needs for the future. We can work with you to safely reduce your premiums. So that you still have some cover in place. Remember, some cover is ALWAYS better than no cover.

Life insurance payouts

We always tell our clients that life insurance companies want to payout. This may sound strange, but no one would pay for life insurance if it didn’t pay out. 

With life insurance not being a legal requirement (unlike motor insurance), there is no reason for insurers not to want to pay out. It certainly doesn’t make good business sense for them to be seen not paying out. All insurers compete with each other for your custom, high claim payout rates are more likely to encourage customers to take cover out with them.

Why are some claims not paid?

The majority of claims are paid except for a small minority. In 2020, only 2% were declined by insurers according to the Association of British Insurers (2021). The reason for this is down to something called non-disclosure. 

A critical piece of information was left out by the applicant at the time they submitted their application. For instance, a serious medical condition which may have contributed to their death. It is understandable that insurers want a fair premium based on how much insurance they will pay out. 

At the claim stage when medical information about the death is requested by the Insurer, medical history will be revealed.

If you have unfairly been paying lower premiums instead of higher ones, this will result in the claim being denied. At a time when the payout is needed most, the most, you can expect will be the paid premiums being returned to you.

You should ALWAYS be clear, honest, and open when applying for insurance. It is vital that you disclose ALL your medical information and past medical history.

You will also be sent a copy of the application, which you should check carefully for any errors or omissions. Our advisers will complete the application with you over the telephone to ensure nothing is missed out.

How can Future Proof help me?

Future Proof can help you if you have:

  • A  pre-existing medical condition
  • Ever been declined cover by an insurer
  • Been offered cover that does not include your hobby 
  • Ever had a medical condition ‘excluded’ from a policy
  • Been offered cover that does not include your job or part of your job role
  • Had a policy that has been ‘loaded’ or ‘rated’ ie your premium increased by an insurer

Our award-winning, no-obligation service will continue for the life of your policy if we are the administrators of your policy.
Find out more about our award winning service.

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