Life Insurance Articles and Guides

Life insurance protects your loved ones with a lump sum payout, ensuring that they don’t suffer financially if you’re not around anymore. A policy is usually bought to cover the period (or term) that your family most need help i.e. during a mortgage term, or when your children are financially dependent on you.

It all depends on a few things; your health, your age, your smoker status, the amount of cover you're after and maybe even your hobbies. Read more about the average cost of life insurance here.

A term life insurance policy runs for a set period of time, making them cost-effective. Whole-of-life policies, on the other hand, payout whenever you die. Because they can last way into old age, they can be expensive.

Although a life insurance payout is often talked about as a tax-free lump sum, this is true up to a point. If your estate is valued above £325,000 (or £650,000 if you’re married) or the life insurance payout pushes your estate value over the threshold, you might be hit with inheritance tax. Read more about life insurance and tax here.

Life insurance covers common causes of death such as illness, disease, cancer, heart attacks or accidents. Depending on your cover, it may also cover a terminal illness diagnosis and suicide. Common exclusions are pre-agreed medical conditions, chronic illnesses, disabilities, drug and alcohol abuse and high-risk activities.

You’re unlikely to be entitled to any refund of the premiums you’ve already paid if you cancel your life insurance. You also won’t get your money back if your term ends and you or your beneficiaries haven’t been able to make a claim; in the same way car insurance won’t pay out if you don’t have an accident, or pet insurance doesn’t pay if your pet stays well.

Life insurance premiums become more expensive, the older you are, when you take out a policy. Buying a policy when you are still young allows you to lock in a fixed lower monthly premium.

Factors such as health and lifestyle will be taken into account when you complete your application. The insurers use these to determine how likely you are to claim, and therefor how much your premiums will be. The healthier you are, the lower these are likely to be.

Things such as smoking can make a big impact to cost, and smokers can often pay around double the price of non-smokers for cover. By getting rid of the cigarettes you could dramatically reduce your premiums as insurers will usually class you as a non-smoker once you have gone 12 months without.

Many UK insurers will offer extra benefits when you take out a life insurance policy with them. These extra services vary by insurer but can include doctors services, such as virtual/telephone GP appointments and counselling, as well as legal, housing and employment advice and prescription delivery.

So it's always a good idea to read through the policy small print, to understand what extra services are provided by your insurer.

Have you just got married? Bought a house? Or welcomed a child into the world? If there is a change in your circumstances, then it is always worth contacting our expert LifeSearch advisers, to ensure that you and your family remain protected in the best way possible.

A trust can prevent a life insurance pay-out becoming subject to inheritance tax. It also allows you full control, to legally document exactly who/what you want the money to go towards. With a Trust, life insurance can pay out within a week, without a Trust the average wait is 3 months.