Life insurance pays out a cash sum if you die or are diagnosed with a terminal illness during the term of your policy.

Life Insurance policies are generally arranged to help families cope with the financial pressure of losing a loved one. There are various forms of life cover, suiting all sorts of needs.

On the whole, people take out life insurance for three main reasons:

  • 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.
  • To provide for their family – life insurance can help insulate your family from the financial impact resulting from your death.
  • To pay for funeral costs – funerals are often a forgotten expense, but nowadays one typically costs around £3,600*.

Life Insurance policies can be taken out on either a single or joint life basis, depending on your requirements. A joint life policy will pay out on the death of the first policyholder.

To speak with one of our advisers, who will be happy to discuss your life insurance options and provide you with a quote (which will always be confirmed in writing) from one of the UK’s leading life insurers, please call us on 0800 644 4468

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What types of life insurance are there?

  • Level term life cover

    Level life cover can be taken out to provide a lump sum to look after your family, pay off the mortgage, or pay for your funeral.

  • Decreasing term life cover

    A decreasing sum assured is sometimes chosen by people who want to cover the amount outstanding on a repayment mortgage. The sum assured decreases in line with the total owed. If you choose a decreasing sum assured, your premium will remain level. This is the cheapest type of life insurance.

  • Index-linked cover

    Arranging cover with an index-linked option means the policy increases on an annual basis to offset the effects of inflation. This 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 2015 it was £1.15. Index-linking your Life Assurance policy will allow it to maintain its value.

    Most providers allow you to opt out of indexation. This means you can freeze your premiums and benefits at any point.

Adding Critical Illness Cover

Critical Illness Cover can be included on a joint or single life basis, and with either Level or Decreasing Term insurance policies. 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.

Terminal Illness Cover

Not to be confused with Critical Illness Cover, 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, it will pay out while you are still alive.

Waiver of Premium

Waiver of Premium Benefit is an add-on that means the insurance company will pay your premiums if you are unable to work for a period of time due to accident or sickness.

It generally comes as a default option on Income Protection policies, but can often also be added to Life and Critical Illness Insurance for a nominal price. Waiver of Premium is only available if you are employed, and usually only until you reach 65.

Family Income Benefit

Family Income Benefit is a life insurance policy that pays an income to your dependants if you die. The income is payable for the remainder of the policy term and should ideally be index-linked.

Life Insurance
Aimee Scott

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