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Do I need a life cover insurance?

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Everyone wants to be safe – it is one of the fundamental human needs. Unfortunately, accidents happen, and at a certain age, being aware of them certainly doesn’t make you feel any better. While death cannot be avoided, it is possible to limit its financial consequences, for example with life cover. We believe that the sense of security and added stability that a policy provides is extremely valuable, but we wouldn’t be ourselves if we didn’t back up this position with a handful of facts and statistics.

What is life insurance?

Life insurance, sometimes called a life cover, is a special type of contract between you and an insurance company. It is an arrangement in which the insurer agrees to pay a certain benefit to your loved ones if you die before a certain age and do not break the general rules. In return for the protection, however, it charges monthly premiums. For the sake of formality, we must add that, yes, there are cases where the money is refused – this happens, for example, if the insured person takes out the contract and, shortly after this event, takes his or her own life.

Why do I need life cover?

life cover policy when i have children
Life cover in the UK can help your loved ones when you are gone.

Let us now consider why we actually buy life insurance. One of the most common reasons is, of course, a mortgage. Although the purchase of a policy is not required by law, having one may be necessary to take advantage of some offers, and it is also just plain sensible – in the event of your death, your family can be financially supported to pay off the obligation.

In addition, you need to bear in mind the risk associated with the loss of income of one of the family members. It is often the case that one spouse earns more than the other. In such situations, death can cause huge financial problems. Things are even worse if you have dependent children.

Do I need a life cover policy?

Buying a life cover in the UK is not compulsory, although as we have mentioned, common sense often dictates it. It is up to you whether you want to protect your loved ones in the event of a tragedy in the form of your death.

However, if you do not have a family and are not planning to start one, you may want to consider buying other products that will work potentially better. It may be that Income Protection insurance will prove to be the solution to your problems, but you need to bear in mind that the procedures associated with a funeral or vacating your home can be extremely expensive. You can, of course, build up adequate savings to protect yourself from these situations, but a safer method would be to purchase a life cover policy.

Amount of life cover – how to determine it?

Choosing the right amount of insurance is not easy and it is impossible to make a top-down estimate without an in-depth analysis of your needs. Obviously, the higher the benefit amount the better, but this also translates into the premiums you pay each month. You need to remember that premiums have to be paid regularly, and cancelling this expense basically automatically means terminating your contract with the insurer.

More often than not, the sum assured (i.e. the value of the benefit your family will receive in the event of your death) is determined by your monthly premiums. For the cheapest policies, which may be less than £30 a month for someone in their 30s, the benefit will not be very impressive, but even £20,000 is much better than having no money at all. In practice, virtually anyone under the age of 40 can afford to buy a life cover policy without any problems, while those of a more advanced age will simply need to put a little more money towards it.

You will find more interesting independent information on this topic at: Life and protection insurance.

Life cover – key information in our article.

How many years to take out life cover in the UK?

In this case, there are exactly as many positions as there are experts in our industry. Each insurance specialist will recommend a slightly different approach, depending on the individual needs of the client.

On the one hand, we can assume that we need insurance cover the most if we have dependents ( children, for example). In that case, the contract should last at least until the youngest of your offspring reaches the age of 25 – the age at which most people can already be financially independent. Remember also that if you are looking to secure a source of income for your children, a potentially better option is to purchase family income benefit insurance.

However, there are other positions. Many people choose to buy life cover that will last until retirement age. This is also a good approach, although we need to bear in mind that when we retire we may not have accumulated a large enough financial cushion in savings

A third option is to buy a policy that lasts as long as your mortgage payment. Obviously, this applies to people who see insurance as additional security for their family property. This is also a very sensible idea, however we wouldn’t treat the policy solely in this way – good life cover in the UK doesn’t have to be expensive at all and it’s worth taking out a longer term policy than just 25 years. Many people have to take out a new contract when they are 55-60 years old, which is often completely unaffordable when they could be using the product they bought when they were younger.

How much does life cover cost in the UK?

In fact, the cost of a monthly life insurance premium starts from as little as a dozen pounds, but the rate depends on a number of factors – including:

  • Age of the insured person – the younger the insured, the lower the premium;
  • Lifestyle of the insured – smokers will pay more;
  • Sums insured – a higher benefit means higher premiums;
  • The health status of the insured person – past medical conditions and BMI may be relevant for some companies;
  • Period of insurance – the longer the contract lasts, the higher the premiums will be, as the risk of death during the insurance contract increases;
  • Special circumstances – people involved in extreme sports will usually pay more for their insurance.

That’s why it’s difficult to give us a specific amount right away. However, we can do so after a short meeting with our agent – we will provide you with a comprehensive insurance quote tailored to your needs and requirements. To arrange a free, no-obligation consultation, contact us today!

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Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts
secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services are not regulated by the Financial Conduct Authority.

Extend Finance nor The Right Mortgage Limited can’t provide advice regarding Personal Pensions, Pension planning or investment planning advice. You must seek independent financial advice from a suitably qualified professional financial adviser who may charge you for advice.

Wills, Will writing, Trusts and Trust planning are not regulated by the Financial Conduct Authority.

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