Do I Need Life Insurance?

You don’t have to have life insurance in the UK. It’s not a legal requirement when you buy or own property. Nonetheless, not having life insurance can obviously put your family at greater financial risk in the event you pass away unexpectedly, especially if you’re the main breadwinner and you have dependents.

You should certainly consider getting life insurance if you have dependents that rely on your income or you want to make sure your family are cared for financially. There are a lot of different types of life insurance for all sorts of situations which means it’s easy to find a policy that suits your specific needs.

• Your family will be more financially secure in the event you pass away
• Makes future planning easier
• Provides peace of mind that your family will be cared for
• Life insurance is flexible meaning that you can use it for certain purposes – e.g. ensuring your family are able to keep the house and maintain their lifestyle

Most life insurance policies offer these benefits but each policy is slightly different in terms of coverage, price, how it’s paid out and more.

Choosing the right life insurance policy is a crucial step in safeguarding your family’s financial future. With various types of life insurance available in the UK, it’s essential to understand the differences and determine which policy best meets your needs.

Here’s a comprehensive guide to the types of life insurance policies help you figure out which option is right for you.

Term Life Insurance

Level Term Life Insurance

Level term life insurance provides a fixed payout if you die within a specified term (e.g. 10, 20, or 30 years). Premiums and the sum assured remain constant throughout the policy term.

Decreasing Term Life Insurance

Decreasing term life insurance, also known as mortgage life insurance, is a product where the payout decreases over time, usually in line with a repayment mortgage. Premiums are often lower compared to level term policies.

Whole of Life Insurance

As the name implies, a whole of life policy covers you for your entire life, guaranteeing a payout whenever you die on the condition that you’ve paid all the premiums. Premiums can be higher, but it ensures a payout regardless of when you pass away.

Over 50s Life Insurance

Specifically designed for individuals over 50, this policy provides a guaranteed lump sum payout when you die. Acceptance is usually guaranteed without the need for a medical examination, making it ideal and easier to attain for older adults.

Critical Illness Cover

Often offered as an add-on to life insurance policies, critical illness cover pays out a lump sum if you’re diagnosed with a specified critical illness. This can provide financial support during serious health challenges.

Family Income Benefit

Instead of a lump sum, this policy pays out a regular income to your beneficiaries for a specified term if you die. It helps replace lost income and maintain your family’s standard of living.

Financial Needs and Obligations

Assess your financial commitments, such as mortgage repayments, children’s education, living expenses and other debts. Determine how much coverage is necessary to meet these obligations.

Policy Duration

Consider the length of time you need coverage. If you have a mortgage, a decreasing term policy might be suitable. If you want lifetime coverage, a whole of life policy is more appropriate.

Affordability

Compare premiums and ensure the policy fits within your budget. Remember that while whole of life policies offer guaranteed payouts, they come with higher premiums.

Health and Lifestyle

Your health and lifestyle impact your eligibility and premium costs. Smokers and individuals with pre-existing medical conditions may face higher premiums or may prefer policies with guaranteed acceptance, such as over 50s life insurance.

Future Financial Planning

Think about your long term financial goals. If you plan to leave a legacy or cover estate taxes, a whole of life policy can be beneficial. For temporary needs, term life insurance might be more cost-effective.

Choosing the right life insurance policy is a critical decision that can provide peace of mind and financial security for your loved ones. By understanding the different types of policies available and carefully considering your personal circumstances, you can select the policy that best aligns with your needs and goals. Remember, the right policy for you is one that offers adequate coverage, fits within your budget and adapts to your changing life circumstances.

Find out more by getting in touch with one of our experts 0333 363 6507.