Life Insurance benefits your surviving family after you die. This is clearly a very emotional time within the family unit, but it can be made just that
little bit easier if money worries can be avoided. If you do want to provide your family with the peace of mind that they are protected from financial
hardship should the worst happen, then Life Insurance is the simplest way to do this.
Of course, we don't know when we are going to die and as a result we tend to put off sorting things like this out. We also think that Life Insurance is going to be expensive; we don't know how much cover to take out and we stall simply because we don't want to think about it. However, planning ahead is clearly a sensible thing to do.
Life Insurance is a product that pays out a fixed sum of money during a chosen time-frame (term). The term is a number of years that can be specified when
you take out the insurance. If you pass away during the term then the policy will pay out a fixed amount, tax free in a lump sum. You can set the amount
of time during which you want the policy to pay out for, so that it can be the same amount of time that you have left to run on your mortgage.
However, it can be for any amount of time that you wish - both shorter or longer terms providing that they are within reason. If you do die outside the term of your policy then no money will be paid out. If you reach the end of the term you can then decide whether you want to take out a new policy or extend your current policy in order to maintain your cover. However, if you do decide not to renew your policy, then there is no return on the paid premiums and therefore no investment value at all.
Life Insurance is a fairly flexible product and as a result you can fix the lump sum payout to stay the same if you die at any point during the policy term, or you can choose to have the lump sum paid out in line with the repayment schedule of your mortgage.
If you die as an income provider for others then it is likely that there will be a financial impact on your surviving family. Upon your death the loss of
family income could lead to hardships or at the very least a reduction in your family's standard of living. Life Insurance protects against this by
providing a tax free, cash lump sum when you pass away, which is paid to your estate. It is unlikely to provide a complete and ongoing financial recovery
for the surviving family but could, for example, pay off a mortgage or provide income replacement whilst they adjust to a new lifestyle.
Many families set specific financial goals to pay for things such as their home, their children's education, or their business. If the death of an income earner threatens to destroy these plans then Life Insurance can be used to recover them. There may also be debts that need to be settled; maybe other loans or repayments on assets such as cars. The costs associated with bringing up a family is also an obvious reason to take out Life Insurance.
So fundamentally, Life Insurance is normally taken out to provide one or both of the following:
There are also additional benefits attached to some Life Insurance plans. These include something called 'temporary cover'. This benefit comes into force
if the insurance company cannot accept your completed application immediately and is often provided for up to 90 days whilst your application is
underwritten. Should you die due to an accident within this 90 day period, then the amount that you had applied for (up to a certain limit) will be paid
As you would expect, there are some specific terms and conditions that do apply with a benefit such as this.
Another advantage is your ability to increase the amount of cover without further underwriting. Again there are certain conditions that apply to this.
A benefit which applies only to Life Insurance plans that are taken out for mortgage protection, is free life cover. This applies if you die between the exchange of contracts and completion of the purchase of your property.
In addition to these attributes, there are a number of optional benefits that come at an extra cost. These include a waiver of premium. This means that if you have an illness that stops you from doing your normal job for a period of time, the premiums for your Life Insurance will be waived. Again there are terms and conditions that will apply to this.
Taking out Life Insurance is simple and you can make an enquiry online using the straightforward form. Insurio will then pass your details to an broker
partner in your area who will be able to discuss the quote in more detail and provide any advice should you decide to proceed. They will present you with an
indicative monthly cost at highly competitive rates and if you decide to go ahead, your application will be sent to your chosen insurance company, who will
assess your application. This is called underwriting.
It is vital that you disclose all of the relevant information about your medical history during this time so that the insurance company can make an accurate assessment and apply the right premium for you. As long as you are completely honest within your application, you have nothing to worry about and the whole process should only take a matter of minutes. However, it may take longer if you have or have had a medical condition, but our partners will be able to help with the details and minimise any inconvenience for you.
Once you have received a decision from the insurance company you will then get the chance to reconsider your choice in order to make sure that you have the right amount of cover, over the right term and to decide whether or not you still want to go ahead. Therefore there's no pressure for you to make a snap decision!