What do you need to know about Life Insurance?

Life Insurance pays out a tax-free lump sum if you die; there is no investment value.

STEP 1 of 2
Type of cover
Life Insurance       Mortgage Life Insurance
 
Cover Level (£)

Number of years
Do you want:  
Critical illness cover
Family income benefit
 

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Is there any investment value in your policy?
No. Once the term is completed the policy simply ends. It’s a bit like car insurance!
What personal details do you need to provide to get a quotation for Life Insurance?
Only your date of birth, sex and whether you're a smoker. So it's really simple to get an immediate quotation.
Should you have a “Guaranteed” or a “Reviewable” policy?
With a Guaranteed policy your insurance company Guarantees never to increase the premium at any time during the policy’s term.
Should you include Critical Illness cover on your Life Insurance policy?
You should certainly consider taking out Critical illness cover whether you combine it into your Life Insurance policy (which is by far the cheapest way to buy both insurances) or you take out separate policies (which gives you far more protection – see below).
Can you have different levels of cover on a joint life policy?
Yes you can - but it may be better to buy separate policies.
Life Insurance is a commonly and established way of providing a tax-free capital sum if a policyholder were to die whilst the policy was in force.

It is important to remember that Life Insurance Policies do not have any investment value. If the policy finishes without a claim, there is no payout.

Perhaps the first thing you’ll need to decide how much to insure for. If you are insuring to provide security for the family, then there are a number of aspects to consider. This can be a bit complicated so we have devoted a special FAQ to it - see below.

If you are insuring your mortgage then sum insured should match the sum you owe your mortgage provider.

The other key point to decide is how long you will be covered for. Most Insurance Companies regard 2 years as the minimum, but 20 - 25 years is the most common length of time. Most Insurance Companies will not offer insurance past the age of 70. A few will insure beyond 70, but that becomes very expensive. For that reason the online quotations we provide do not go beyond a 70th birthday.

Think about whether you need cover for Joint or Single lives. This will depend on your circumstances, so see the related question below or more details.

Similarly, you’ll need to choose between a Guaranteed or Reviewable policies. The rule of thumb is that Guaranteed policies have higher premiums to start with, but over the longer period they are the better deal. Again, you can read more in the related question.

Don’t worry about whether you need to include Terminal Illness cover. We automatically include Terminal Insurance cover in your policy at no extra cost. So, if you develop an illness and your doctor confirms that you are expected to die within 12 months of diagnosis, the policy would pay out straight away, rather than delaying payment till after you pass away.

Frequently Asked Questions related to the above topic.
Click below if you wish to read them: -