All that you need to know about life insurance

A decade ago, half of women had no life insurance cover. Yet, In 2017/18, 30.7 million working days were lost due to work-related ill health and non-fatal work place injuries.

In alliance with Money Expert life insurance, we have put together a handy summary of all you need to know about the important but overlooked world of life insurance.

What is life insurance?

Life insurance is a policy that pays out to your next of kin in the event of your death or critical illness, providing them with peace of mind and financial security in this traumatic time.

What does a life insurance policy cover?

Policies can cover some or all of the following expenses:

Mortgage protection- a decreasing term insurance policy ensures that your family don’t lose their home if they are reliant upon your income in order to keep up with mortgage payments.

Loss of incometo your dependents– a level term policy pays out a fixed lump sum in the event of your death.

Funeral costs- the average funeral plan can vary from £3000-£4000.

Children’s educationenabling them to succeed in life, even after you have gone.

Critical illness cover and family income benefit can also be provided.

How much does a policy cost?

They start from as little as £5 a month. Your premium is affected by factors such as age, health and lifestyle along with policy type, length and the amount of cover required.

How do you know which type of policy you need?

There are two main types of life insurance: Level term and fixed decreasing term

1. Level term life insurance– this tends to be more expensive than a decreasing term policy but it supports your dependents until they reach an age where they are financially self-sufficient. It pays out a fixed amount to your beneficiaries if you die within a fixed term. The average term is 10-25 years.
2. Decreasing term policy– also known as mortgage life insurance. This pays off a specific debt such as a mortgage and tends to be cheaper than a level term policy. As for level term insurance, a term is set but the pay-out decreases as the term progresses, in line with the decreasing debt.

Anything else you need to know?

– Read the small print carefully.

– Make sure you are aware of any exclusions.

– Do disclose all details of any illnesses or smoking habits as these could invalidate your policy. Most policies do not cover death caused by gross self-negligence, alcohol or drugs.

How do you take out a policy?

Once you have completed a short form on the money expert website, an expert will be in touch to discuss the best options with you to meet you and your family’s needs.

To summarise, life insurance provides peace of mind that your loved ones are provided for in the event of death. Do make sure you seek expert advice in selecting the best policy for your needs.