Is Life Insurance worth buying?

Is Life Insurance worth buying? Thumbnail

Posted 27th November 2020 by Lewis Murray

Is Life Insurance worth buying?

The Ultimate Life Insurance Quotes Guide

Why You Should Compare Life Insurance Quotes

Nowadays you are used to being able to compare your Home Insurance, Car Insurance and Home Energy, so why should Life Insurance be any different?

The challenge with Life Insurance is that to get the best price you usually need to disclose details about your health and lifestyle. Sadly, this puts many people off (usually because they fear their Life Insurance will not pay out). That’s where we come in!

As an award-winning broker, we can help you find the best Life Insurance Premiums by first understanding your needs, then we help you find your most tolerant and cheapest insurer. We will then help you to compare life insurance quotes that are bespoke to your needs.

Think of us like a talking Life Comparison service.

Which Life Insurance is best?

Which Life Insurance is best?

One thing that puts people off getting Life Insurance quotes is all the Jargon attached to it. There are a few options to choose from and lots of insurers add fancy names to their policy, which further confuses matters. The underlying options however are quite simple as there are only a few types of Life Insurance:

Level Term Life Insurance

Pays out a lump sum that remains at the same level for a fixed period (often used to cover a mortgage or as a lump sum for children while they are young). This is often a cheap way of securing large levels of cover while you have large responsibilities like a mortgage, car finance or young children.

As a parent you may choose too take a large level of cover in this way to secure yourself for a 20 year term for instance (until the kids move out). However, it is worth remembering you can often get a lot of cover for your money because if you do not claim during the policy term the money you have paid in will have been “lost”. This is however exactly the same as how Car Insurance and Home Insurance work too (we just don’t think about it in the same way as we renew these policies each year).

Decreasing Term Life Insurance – (Mortgage Life Insurance)

This cover pays out a lump sum that is designed to decrease in line with your repayment mortgage. How it decreases can be a little confusing. All insurers will give you a percentage when you take this cover. Quite simply this percentage tells you that if your interest rate on your mortgage is below this number then the cover should be reducing slower than the balance on your mortgage.

Similar to Level Term, Decreasing Term Insurance is a set up over a fixed period of time. The lump sum decreases each year until it reaches zero at the end of the final year. At this time hopefully your mortgage is paid off (Congratulations!). Your needs for Life cover have then changed and it may be time to consider a different type of life insurance.

Increasing (Index Linked) Term Life Insurance

Increasing or Index Linked Term Life Insurance is very similar to Level Term Life Insurance policy. It runs for a set period of time and is used for similar purposes to Level Term Insurance. The difference with this policy is that the value of it will increase over time. Each year your chosen policy provider will write to you offering you an increase on your lump sum payment.

The increase is designed to keep your policy relative to “what stuff costs”. The best way of explaining this is to think how much a Freddo chocolate bar or an 99 ice cream cost when you were a child. I bet the price is a lot more now, right? This is “inflation” at work. Over time things cost more and wages rise. So, if you were to take a policy that pays out £100,000 now and it pays out in 30 years time it may not give your loved ones as much spending power as you would have hoped.

This is where this policy is useful. Each year the Life Insurance policy can rise in line with the Retail Price Index (RPI) or a set amount (dependant on the insurer). You will have the opportunity with most insurers to choose if you wish for the cover to remain at the same price and cover level or to let it increase. Beware though, with some insurers if you decline an increase they may not offer to increase your price again in the future.

Increasing Life Cover often costs exactly the same as Level Term Insurance in the first year so be sure to ask your broker to explain how your chosen insurers indexation works.

Whole of Life Assurance (Underwritten)

Whole of Life Assurance is similar to a term policy in the fact that you can pick a lump sum level and you then pay your fixed premium to secure that level of protection. The difference from a term policy is that this policy will never run out. In effect you are “guaranteed” to get a pay out with this type of Life Insurance policy (as long as you continue to pay your premiums for the term of the insurance policy). This cover is therefore typically more expensive then Term Life Insurance policy.

As the cost of this policy is usually higher most people tend to use it only for needs they feel will not change in the future. Good examples of this may be funeral costs or for inheritance tax planning.

Over 50’s Non Medical/ Guaranteed acceptance Life Insurance

This type of policy is usually only available to people aged between 50 and 80 (this does vary with some insurers). It works in the same way as the Whole of Life Cover in the fact it keeps running indefinitely. Usually these policies are very quick and simple as they ask no medical questions what so ever. This means you can get cover even with pre existing medical conditions. There is usually a “waiting period” where the full cover amount will not be paid out for claims as a result of a medical related death.

Family Income Benefit

Family Income Benefit offers a fixed monthly payment to be paid to your family instead of a lump sum. This type of Life Insurance policy is often considered by families who would prefer an income rather than a large amount. This can however restrict your loved ones choices more than the other types of cover.

Still confused on the different types of Life Insurance? Don’t be, it is a lot simpler than it sounds. At Protect Line our brokers are trained to listen to your needs and only explain the policy(s) that are relevant to you.

Do I even need Life Insurance?

Do I even need Life Insurance?

You’re not the only person asking that question. There is nothing fun or exciting about taking out a Life Insurance Policy. In our opinion it is a personal choice. Often you’ll hear opinions about what a parent should be covered for etc. Ultimately it’s your choice. What we can tell you is the most popular reasons why other people choose to take cover:

  • Rent or Mortgage payments (sometimes it’s a requirement from your mortgage company)
  • Children’s education costs (Uniforms, school trips, University etc.)
  • Funeral Costs
  • Support for a single parent (we don’t want to think about it but would your partner need some
    support? Maybe a cleaner or a bit more child care?)
  • Cover Inheritance Tax Bills
  • Leave a lump sum to give Kids or Grandkids a good start in life

Whatever the reason we are here to listen and help you compare life insurance policies to find the one that is right for you.

Should I take a Joint Policy?

A Joint Life Insurance policy is cover that is often set up to very quickly and often when you take a mortgage. On the face of it, it seems sensible. Putting both names on policies becomes the norm especially when it comes to mortgages, home insurance, car finance etc.

BUT

With Life Insurance it’s worth considering your options. A joint policy will typically cost you nearly double the cost of 2 single policies. The MAJOR difference is that on a joint policy it will usually only pay out once (when the first person passes away). This may leave the second person without a policy at a time of life where cover will probably be more expensive if not impossible if any health conditions have developed.

Often £1 to £2 extra could double the join pay out of your policy should something happen to both of you. We find this is especially important when we talk to parents as it leaves cover not only for the mortgage but then also another lump sum for the children.

What is the best and most affordable life insurance policy?

Let’s get straight to the point. Life Insurance starts from £5 a month. However, not all polices are created equally. Going directly to 1 insurer will only get you one price. Plus, until you complete an application you will not know the true price. Often the premium will increase once you disclose your medical history. We compare Life Insurance quotes on your behalf to help you find the cheapest premium.

Why do I need to disclose details about my health?

Unlike Car Insurance and Home Insurance, Life Insurance is based on your health and lifestyle. This means it can be tough to find the best Life Insurance company to meet your needs. This is where using an award-winning Life Insurance brokerage like Protect Line can help by using our Life Insurance comparison service.

Do I get a discount for being a non smoker?

Yes! If you used to be a smoker and you’ve quit, good for you! If quit at least 12 months ago (and have not had any nicotine or nicotine replacement products since) then you may get your policy up to half price!

Be aware though, some insurers now require you to be nicotine free (including vapes and e-cigs) for 5 years. As a broker we can quickly help you to understand which options will be the best fit for you to help avoid any surprises.

If you are still smoking or have quit recently, don’t despair! Some of our insurers will actually decrease your premiums once you have been smoke free for 12 months without having to do a whole new application. Ask us if you’d like to know more about this.

I’ve heard Life Insurance doesn’t pay out? Is that true?

Of course, some of the time. However, the latest stats from the Association of British Insurers show that 97.4% of Life Insurance claims were paid in full in 2019*. The main reason for a claim not being paid is “non disclosure” which is just not being truthful on your application.

Life Insurance providers do not want a reputation for not paying out on your policy. As long as you are truthful, then all should be fine.

Critical Illness Insurance claim pay out rates are slightly lower at 91.6%. This is usually down to people either misunderstanding what is covered in their policy or non disclosure. It’s always important to read the definitions in your Critical Illness documents carefully so you know what you will get a payout for.

Should I get Life Insurance only cover the main breadwinner?

It’s totally up to you. Most people cover the main earner first. However, we always ask “would you be able to continue in your job should the worst happen to your partner?”. If the answer is “no”, maybe because you are a parent and the children would need you, then maybe joint cover or 2 policy’s may be the way forward.

What cover should I have for my mortgage?

Life Insurance is often a requirement from your mortgage company.

If you are unsure, it may be good to check. Either way, the question we would ask is “who would pay your mortgage if you were not here?” and “would you want them to have to?”. If the answer is “no” then we can certainly help find a life insurance policy to suit you.

I already have cover, can I have multiple policies?

Of course! You are not restricted to one Life Insurance policy. You can have as many as you feel you need. Often our circumstances change and we need more cover. Sometimes a new life insurance policy can top up to your old one. Some Life Insurance Providers will ask the total value of the other Life Insurance policies you have elsewhere, but that is just to ensure your cover level is relative to your income and responsibilities. We can always provide you with multiple Life Insurance quotes, that way you can compare keeping your old Life Insurance in place or replacing it with one new policy.

Do you cover people with health conditions?

We’re all human! Most of us have had a health issue or two in our past. That should not mean you cannot get the cover you deserve. I’m sure you’ll have heard before that Life Insurance companies will not cover people with “pre-existing conditions”. That is simply just not true (at least not always).

As a broker, we get the luxury of being able to shop around for you. That means while one insurance provider may say “no” we can use out years of experience to help you find an insurer that will help.

Just because you have a few health issues, it does not mean you cannot get underwritten insurance.

We have covered people with a huge range of conditions including:

  1. High Blood Pressure
  2. Diabetes (type 1 and type 2)
  3. High or Low BMI
  4. Stress, Anxiety and Depression
  5. Arthritis
  6. High Cholesterol
  7. Cancer
  8. Heart attack / Angina
  9. Strokes

Even if you have had a previous policy declined we would recommend you give us a chance to help. It can seem difficult to get Life Insurance if you have had a previous policy declined but we have insurers who specialise in some of the above health conditions.

What happens if I get diagnosed with a Terminal Illness?

Terminal Illness is usually defined very specifically by each insurer. Your policy documents will clearly state how your insurer defines it. However most of the time is is as simple as being diagnosed with a condition and given less than 12 months to live.

Most Life Insurance policies give you the option of receiving a full pay out of your policy early if you are diagnosed terminally ill.

When is the best time to set up Life Insurance policy?

“Fun is like life insurance: the older you get, the more it costs.” Ken Hubbard

The easy answer is “Now”. If only when we were all 18 we knew how cheap Life Insurance cover was? Typically the older we get the more expensive a new life policy will be. However, another way to look at this if Life Insurance cover will probably never be cheaper for you than it is today. The last thing any of us want is to pass away and leave debt or financial challenges to loved ones. Securing an amount that is affordable in the long run is something we believe is incredibly important when choosing your policy.

People tend to take cover at key Life events:

  • The birth of a child
  • Securing a new mortgage
  • Retiring from full time work (where you may have had death in service)
  • Paying for a loved ones funeral costs

These are often the events that spur us all into action and typically start to compare Life Insurance companies.

What is Critical Illness cover and how much does it cost?

Critical Illness cover pays out for a pre-defined list of Medical Conditions including diseases like Cancer, Heart Attacks and Strokes. These are just a few of the many Illnesses often covered by Critical Illness Cover. This cover is designed to cover these conditions when they are “Critical” so some minor cases are not covered by every insurer. It’s especially important to read the details on what is and is not covered within your Critical Illness Cover. The detentions get updated regularly so you may find a new policy could be better or worse than a policy you took out in the past. Typically you will also get Life Insurance cover included with your Critical Illness but most policy’s
will only pay out once.

Why Should I consider Protect Line to cover my family?

We’re the UK’s #1 Life Insurance Broker, as voted for by real customers

Providing first-class service is something we’re extremely proud of. We’re fortunate that our customers have recognised this and have voted for us in these excellent awards.

  • Protection Firm of the Year – Sesame Awards 2011
  • Best Reinstatement Performance– Legal & General announces winners of Business Quality Awards 2017
  • Best Insurance Broker – Smart Money People 2019
  • Star Employer Award – The Rockstar Awards 2019
  • Outstanding Quality Initiative – AIG Quality Awards 2019
  • Highly Commended – Best Digital Support – AIG Quality Awards 2019
  • Best Insurance Protection Broker – Insurance Choice Awards 2019
  • Best Insurance Protection Broker – Insurance Choice Awards 2020
  • Best Overall Insurance Broker – Insurance Choice Awards 2020
  • Treating Customers Fairly Champion – Insurance Choice Awards 2020

 

But I’ve never heard of Protect Line…

Who are you?

We’re a life insurance broker, offering a fee-free comparison service – we make it easy to find the right life insurance to cover you and your family.

Established in 2010, we have protected over 200,000 families with life insurance and protection products, giving our customers peace of mind and the knowledge that their loved ones are financially protected, should the worst happen.

Our founders have a clear mission – to protect as many UK families as possible and prevent financial hardship for the ones we leave behind.

We have a 5 star rating on Trust Pilot from over 26,000 happy customers.

Do I have to pay a fee for your service?

No, absolutely not! We believe our help should always be fee free. Our service is all about helping you find the cover you feel is right for your family. If we are successful and you decide you would like to take life insurance cover with one of our insurers then we would be paid a commission from them. This would however not be charged back to you. In fact it is within our interest to make sure this is cover that is suitable for you and your family for the whole policy term .

When would I be protected if I took a policy today?

That is totally up to you. If you are in good health you could be covered from today! If however you are the type of person that would like to read all your documents before your policy starts we can set up your start date to be a month after you talk to us. That means you get all your documents and time to read through them before your cover starts or any payments for your insurance policy would be taken.

How Can I get Covered?

That is the easy bit! Once you have made the decision to get a Life Insurance quote that is the hardest bit done. One of our FCA regulated UK based agents will take you through all the options available and help you to select a policy that suits your need. You’ll get all the details by email so you can have a good read through them. Click here to take the first step towards peace of mind for your family. Our process is designed to be quick, easy but more importantly friendly and focused on your needs.

How do I ensure my loved ones get the money from my Life Insurance?

We offer a free trust service where we will help you name the people you would like the money to go to “beneficiaries” and nominate the people that will ensure they get it “trustees”. It’s a lot easier than it sounds.

What about a free gift?

We have never believed in offering free gifts to “bribe” people into protecting their families or getting Life Insurance quotes. We believe in only setting up cover for families that believe in their policy and see the value of the cover they have arranged. A free pen, cookie or DAB radio has to be paid for somewhere, we believe in putting that money back into a quality service and ensuring you get the right amount of cover for your loved ones.

So, what are you waiting for?

Click here and to get started and compare Life Insurance quotes today .

Get a free life insurance quote today

Get a free quote
Family illustration

*https://www.abi.org.uk/news/news-articles/2020/05/record-98.3-of-protection-claims-paid-out-in-2019/#:~:text=Record%2098.3%25%20of%20protection%20claims%20paid%20out%20in%202019%20ABI