Life Insurance

Cover for the worst happening

Individual Protection

Family Protection

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Life Insurance

Not everyone needs Life Insurance. If you don’t have any dependents or liabilities (e.g. a mortgage) that you’d want taken care of if you were to die, then Life Insurance possibly isn’t for you. Moreover, Life Insurance isn’t compulsory, not even if you have a mortgage.

However, many clients with families and mortgages look to Life Insurance to provide valuable protection to their loved ones should the worst happen.

Two of the most common uses of Life Insurance include covering the outstanding mortgage balance, allowing your loved ones to stay in the family home should you pass away. Alternatively, you may use your Life Insurance to provide financial security for your family after your death.

A combination of the two is of course also possible depending on your needs – discuss with your adviser regarding the appropriate level of Life Insurance for your circumstances.

What’s the Risk of Passing Away?

We’ve used our Life Expectancy Calculator to work out the risk of a healthy male of three different ages passing away over the next 10 years:

Age 30 Age 40 Age 50
1 in 112 1 in 53 1 in 23

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Should I Add Critical Illness Cover?

Most Life Insurance plans have the option of including Critical Illness Cover.

Where Life Insurance only pays out on death, a Critical Illness plan pays out the sum assured should you be diagnosed with any one of the critical illnesses as defined by the insurer’s terms.

These conditions include the likes of some forms of cancer, heart attack and stroke, which represent the top three claims on all such policies.

Given the risk of suffering a serious illness is a lot higher than that of dying, the monthly premium will increase to include critical illness cover in your policy.

However, should you suffer a serious illness there are often lifestyle changes to make, whether that be reducing working hours, stopping work completely or modifications to your home which can all have a considerably impact on your finances. This is where Critical Illness Cover can step in to help.

Many individuals opt for Critical Illness Cover for the peace of mind it offers should something serious happen.

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Do I Need to Write My Life Assurance Policy Into Trust?

Writing a Life Insurance policy into trust means at claims stage the benefit is paid from the life insurer directly into the trust to then be distributed to the nominated beneficiaries.

Writing a policy into trust is the best way to ensure your loved ones receive the payout out quickly and the lump sum gets paid to the correct beneficiaries tax free.

A trust means the payout avoids both probate and any inheritance tax so your family receive 100% of the benefit.

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  1. You might not need Life Insurance if you don’t have any debts, don’t have a family to worry about and have no need for extra funds should you pass away.

    However, for many of our clients this simply isn’t the case — they have mortgages, debts, families and other considerations to be concerned about if they were to die prematurely that they want to be taken care of.

    Whether or not you need Life Insurance will depend on you and your circumstances, but broadly speaking if you’re in need of funds after you pass away for any reason then it might be something you wish to consider.

  2. No, you don’t need Life Insurance to get a mortgage. It’s not a legal requirement or a regulatory necessity to have Life Insurance in place before taking on a mortgage.

    However, think very carefully about what might happen to your family and their home should you pass away before repaying the mortgage debt. Could they afford to take on the debt and continue living in the family home? Or would they have to sell up and downsize because they couldn’t afford to keep up with the mortgage?

    If you think your loved ones would struggle financially with the mortgage and other household bills should you pass away, then Life Insurance may be worth considering.

  3. Whole of Life Insurance lasts for your whole life and pays out whenever you die, regardless of when that may be. Providing you continue paying the premiums, you’ll get a payout on your eventual death.

    As a result of this certainty, Whole of Life Insurance is an expensive option because the insurer knows it will definitely have to pay out eventually.

    Term Insurance, on the other hand, only lasts for a set term and then expires, say 25 years. After this point, the Life Insurance ends and you’re no longer entitled to a payout should you pass away.

    For this reason, Term Insurance tends to be much cheaper than Whole of Life Insurance and you are generally able to insure larger sums much more affordably than would be the case for Whole of Life Insurance.

  4. This is a subjective question with no easy answer.

    It might be fairly simple if you have a mortgage — you want at least enough to cover the mortgage debt to ensure the house is fully repaid should you pass away.

    However, even after the house is paid off, could your family continue to live in it, say keep up with the bills and utilities? If not, you might want to consider extra over and above the mortgage for family protection purposes.

    Family protection is a wide field, with a lot of factors to consider. Would you need to pay for school fees, a university education, childcare? What other costs and expenses would need to be met if you were to pass away.