TL;DR
In short
- Home insurance protects your property, life cover pays out if you die while the policy is in force, critical illness cover pays a lump sum for a covered condition that meets the policy definition, and income protection pays a regular income if illness or injury stops you working.
- Cover is worth considering if you do not have savings to live on for months without work, if your family depends on you financially, or if you have a mortgage.
- Premiums depend on your age, health and the cover you choose, and are generally lower if you take out cover when you are young and healthy.
- Insurance is not an investment and you may never need to claim; its value is that it protects you from costs your household budget could not absorb.
- A broker can compare policies from a range of insurers and explain the differences in cover.
When you buy insurance, you mainly want peace of mind and protection from expenses that your household budget could not cope with. Does that make a policy worth paying for? It can, and this article explains why. You will find out, among other things:
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What affects the price of insurance policies
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When it is worth considering insurance
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What your policy will protect you against
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Why insurance can be worth it
What types of insurance are there?
There is a wide range of financial products available on the UK market. In addition to mortgages, Extend Finance assists clients in selecting suitable insurance policies. Our range includes:
You are unlikely to need all of these policies, but some are worth considering.
Most policies are optional. It is up to you whether you buy life insurance or insurance for your child. However, remember that your decisions also affect other people, such as your family. Could you keep up your mortgage and bill payments if a serious illness stopped you working for months?
Who can help you choose insurance?
Due to the complex nature of the insurance market, many UK residents choose to enlist the help of a broker. A broker can compare policies from a range of insurers and explain the differences in cover, which can help you make an informed choice. We compare insurance options from a broad range of UK insurers to help identify cover that suits your needs and circumstances.
Another advantage of working with a broker is that you can carry out a regular review of your products, checking their cover, cost-effectiveness and terms and conditions. The insurance market changes all the time, so it is worth checking regularly whether the policies you have chosen still suit you.
When is it worth taking out insurance?
To decide whether insurance is worth it for you, start by answering a few questions, not all of them simple:
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Do you have the savings to cover the expenses that a policy would cover?
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Can you afford to pay your premiums each month?
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How much a year can you afford to spend on protecting your finances?
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Do you have regular debt repayments, such as loan instalments or a mortgage?
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What would you like to protect yourself against?
If you do not have savings you could live on for months without work, income protection is worth considering. For example, a serious illness or injury could keep you off work for a long time while your bills still need paying. On the other hand, insurance comes with an obligation to pay premiums. This is a monthly or annual commitment that you need to be able to afford for as long as you keep the policy. If you are struggling to keep up with your existing instalments or premiums, it is worth seeking help, for example from a financial adviser.
It’s also worth working out how much you can afford to spend on cover. Different policies cover specified risks, subject to limits and exclusions. Choose cover for the financial risks you need help managing and check what each policy excludes. Approach the topic sensibly and aim for a reasonable balance.
What does your policy protect you against?
Here is what the most important policies cover. To find out more, see our blog and the dedicated pages on our website.
Income protection
An income protection policy could save you from financial problems if illness or injury stops you earning a living. Your insurer will pay you a benefit for a set period of time, usually between 50-70% of your gross monthly income. Long-term income protection usually pays out until you can return to work, retire, die or reach the end of the policy term, whichever comes first. Short-term policies pay for a limited period, such as 12 or 24 months per claim. As an illustration, one example quote for a 32-year-old non-smoker in a low-risk office job was around £23 a month (September 2026). Your premium will depend on your age, health, occupation, benefit amount and waiting period, and premiums rise markedly with age.
Income protection insurance will pay you a regular income if you can’t work because of illness or injury.
You can read more about this in our article Why do I need income protection?
Home insurance policy
Confirm the required start date with your conveyancer and lender before exchange. In England and Wales, buildings cover is usually needed from exchange of contracts, although arrangements for some leasehold properties differ. Requirements elsewhere in the UK depend on the contract and local process. Contents insurance is separate. Home insurance can protect the building itself, its contents or both, depending on the cover selected. Premiums vary by property, location, level of cover and insurer.
You can read more about property policies in the Home Insurance section.
Life cover
A life cover policy does not protect you, but your family. It works simply: the insurer pays out a lump sum if you die, provided this happens within the policy term. Depending on the option you choose, the cover lasts for the period agreed in the contract, for example 20 years, until you reach a certain age or for the rest of your life. Premiums depend on your age, health, smoking status, the sum assured and the policy term.
You can read more about life cover on the website of the government-backed MoneyHelper service and in our article.
Critical illness cover
Critical illness cover can give you significant financial support if you suffer a serious illness. If you are diagnosed with a condition covered by your policy that meets its definition, the insurer pays a tax-free lump sum. You could use it for medical costs, travel to see specialists or even mortgage repayments. The cost of critical illness cover depends heavily on the health of the person covered.
You can find out more about Critical Illness cover in our article, and if you’re a parent, be sure to check out the post Insurance for your child in the UK.
The other products we offer are basically derivatives of the insurances we wrote about above. You can find information about these policies on our website.
Why insurance can be worth it
Insurance is not an investment and you may never need to claim; its value is that it protects you from costs your household budget could not absorb.
Premiums depend on your age and health
If you’re young, you may not have much in savings. In that situation, income protection or critical illness cover can be particularly useful. Premiums depend on your age, health and the cover you choose, and are generally lower if you take out cover when you are young and healthy.
Whole-of-life cover can be a form of financial protection for your children
Every one of us will die one day. As upsetting as it is, death is unavoidable and it is worth preparing for it in advance. A whole-of-life policy pays out whenever you die, provided you keep up the premiums, and usually costs more than term cover for the same sum assured. Your family can use the payout for any purpose: it is up to your loved ones to decide whether to pay off your debts, move house or further their education.
A payout can be far larger than your savings
The payout is set by the cover you choose and can be far larger than the savings you could draw on in an emergency. Of course, you may never need to claim on the policy you take out, but exactly the same can be said for savings.
What you could receive compared with what you pay
Home insurance premiums are an expense, but think of the costs you would face after a theft, storm or fire. A single claim for serious damage can be worth many times the premiums you have paid. You may never need to use your policy, but what if you are unlucky? Insurance gives you peace of mind and limits the financial impact of an unexpected event.
Summary
Many of our clients ask whether insurance is worthwhile or worth buying. There is no definitive answer to this, as everyone’s situation is different. However, as industry experts, we believe everyone should at least consider buying a policy. Premiums depend on your age, health and the cover you choose, so it is worth comparing your options before you buy.
Planning to buy insurance or change your current policy? You are more than welcome to get in touch with our team. The advisors at Extend Finance will not only help you choose the right insurance, but also answer any questions that arise.
FAQ
Frequently asked questions
What types of insurance are there?
The main types of protection insurance include life cover, critical illness cover, income protection, whole-of-life insurance, family income benefit, over-50s life cover, personal accident cover and home insurance. Each one protects against a different risk, from damage to your home to a serious illness or your death.
Who can help you choose insurance?
An insurance broker can help. A broker can compare policies from a range of insurers and explain the differences in cover, which can help you make an informed choice. Working with a broker also lets you review your existing policies regularly.
When is it worth taking out insurance?
Cover is worth considering if you do not have savings to live on for months without work, if your family depends on you financially, or if you have debts such as a mortgage. Before you buy, make sure you can afford the premiums for as long as you keep the policy.
What does your policy protect you against?
It depends on the policy. Home insurance covers your building, its contents or both, life cover pays a lump sum if you die within the policy term, and critical illness cover pays a tax-free lump sum if you are diagnosed with a covered condition that meets the policy definition. Income protection pays a regular income if you can’t work because of illness or injury.
What does income protection pay out?
Income protection pays a regular benefit, usually a proportion of your gross monthly income, if you can’t work because of illness or injury. Long-term policies usually pay until you can return to work, retire, die or reach the end of the policy term, whichever comes first, while short-term policies pay for a limited period per claim.
