It's not something we really want to think about... but can you afford not to? 
What is Life Insurance? 
Life insurance is a type of policy that will provide financial support to your family and loved ones in the event of your death. As a nation, we in the UK are not very good at talking about death, even though making such plans for the future can help alleviate so much stress in times of grief. It’s a stark statistic, however, that a parent of a child aged under 18 dies every 22 minutes in the UK, according to Child Bereavement UK. A life insurance policy can provide dependents with a lump sum that can cover the income of the person who has died or go towards larger financial commitments such as a mortgage or children’s university fees. 
Why do I need life insurance? 
Have you ever considered the answers to these questions?  
If you died, would your loved ones be able to: 
continue paying your rent or mortgage? 
• cover the cost of your funeral service? 
• be able to cover additional childcare costs? 
• continue to meet the general day-to-day cost of living? 
clear any outstanding debts you may leave behind such as credit cards? 
• cover any additional care costs for your family? 
provide a nest egg for your children or contribution towards larger future costs such as university or getting married? 
When is a good time to take out life insurance? 
The sooner the better! Generally, the younger and healthier you are, the cheaper your premiums are going to be. It is always a good idea to review your life insurance requirements when any major changes or life events occur, such as: 
• buying a house 
• remortgaging your property 
• getting married 
• starting a family 
• separating from a partner 
• changing jobs/ losing your job 
• losing a loved one 
What if I can’t afford life insurance? 
The cost of a policy (your monthly premiums) will depend on your individual circumstances such as your age, health, overall lifestyle (such as whether you are a non-smoker or smoker), existing medical conditions or health issues and the type of work you do. It will also depend on the type of cover, the amount of cover and the term of the policy. 
We insure our cars, our buildings and contents, holidays, expensive items and pets – so why is it that we still don’t prioritise ourselves and our families in this way? Potentially for the same price as a takeaway, a week’s worth of take-out coffee, a beauty treatment…the list goes on – it’s something to think about. 
How does life insurance work? 
In simple terms, premiums are paid monthly to the insurance provider for the duration of your policy. If death occurs within the term of the policy, a lump sum will be paid out to the beneficiaries. The amount you pay will depend on the type and length of policy you choose. Generally, the younger and healthier you are, the cheaper your quote will be. 
What are the different types of life insurance? 
The three main types of life insurance to consider are: 
• term assurance policies 
• whole of life policies 
• family income benefit policies 
What are Term Assurance Policies? 
This is the most basic and common type of cover. You decide how much cover you would like and how long you would like it to run for. Many people choose to run the insurance cover in line with their mortgage term. If you die within the term of the policy, the policy will pay out. If you survive the policy, you won’t receive any premiums back. 
There are three different types of term assurance policy: 
• level term 
• decreasing term 
• increasing term 
The level term policy offers the same cash sum payout for the duration of the policy, meaning that the payout would be the same on day 1 as it would be on the last day of the policy. The decreasing level policy offers a decreasing cash sum payout. For example, if you died within the first year of the policy, it would pay out more than if you died in the tenth year. This makes it particularly suitable for covering capital & interest/repayment mortgages. An increasing term policy provides a payout that increases over time, with the increases usually running in line with inflation. 
What are Whole of Life Policies? 
These policies cover you for your whole life and they pay out on death no matter when that may be, assuming you keep up the premiums until death. Due to the guaranteed payout, the premiums can be more expensive than term assurance policies. 
What are Family Income Benefit Policies? 
This is a type of life insurance that pays out a monthly income to your beneficiaries instead of a lump sum. If you die, the monthly payments will continue until the end of the policy. 
Is life insurance worth it? 
It’s one of those things: we always hope that any kind of insurance is the biggest waste of money we ever have because we always hope we never need to make a claim. It’s worth the consideration and the discussion though. It’s also worth bearing in mind that, although it’s not very nice to think about, most life insurance policies provide cover for terminal illness where you are given less than 12 months to live. 
What is the financial impact of terminal illness? 
What happens if you become terminally ill? In terms of terminal illnesses, according to Marie Curie*: 
the total cost of living with a terminal illness in the UK can be between £12,000 and £16,000 per year 
• more than 4 in 5 families living with advanced cancer face income loss as a result 
43% of people caring for someone at the end of life say they struggle financially 
• many carers spend over 40 hours a week caregiving – with impacts on their own work and income 
60% of people living with some terminal illnesses rely on benefits as their main source of income 
• the average cost of home adaptations in the UK is £16,000 
under current UK law, terminally ill people must prove they have fewer than six months to live to get fast track access to benefits 
• many families build up a ‘debt legacy’ to meet costs of living and care 
*Marie Curie Sept 2022 www.mariecurie.org.uk 
What is the financial impact of death? 
It doesn’t seem right to think about the practicalities and costs associated with dying. However, if you take the time to plan ahead, it could save your spouse, partner, loved ones and family thousands of pounds and additional stress during a difficult time. 
According to Sunlife*, in 2020 the average cost of dying reached £9,263. The most significant cost comes from funeral plans and the type of funeral service chosen. For example, even a basic option costs an average of £4,417 and these prices continue to rise. Life insurance can be the safest way to ensure the costs related to your passing don’t fall onto your family at an already incredibly challenging time.  
You could leave a lump sum to ensure not only your funeral costs are covered, but also general living costs to maintain a comfortable lifestyle at a time where work might not possible. Speaking to an experienced financial adviser or specialist protection adviser to discuss the types of life insurance available is a good first step towards protecting your loved ones. Getting a quote, along with sound financial advice, can be straightforward.  
Call us on 01302 866787 to find out more. 
*www.sunlife.co.uk Sept 2022 
Can I choose who receives the money if I pass away? 
In general terms – yes. However, you will need to make sure the right arrangements are in place. In the instance of a joint policy, the money will usually go to the surviving policy holder unless you have made other specific arrangements. If you have a single life policy, the money will be paid into your estate. One of the options is to place it into a trust or have specific instructions within your will. We recommend you seek legal and financial advice when thinking about trusts or writing a will. 
Why might life insurance not pay out? 
The most common reason is non-disclosure, which means that the policyholder wasn’t completely honest when taking out the policy. For example, this could be related to pre-existing illnesses such as cancer or mental health conditions, or to lifestyle choices such as substance misuse and smoking. It is also important to ensure you pay your premiums on time each month and to check the small print of your specific policy. According to Aviva, typically over 99% of all claims are paid. 
How do I find out more? 
Call us on 01302 866787 and speak to one of our trusted advisers. 

FCA Disclaimer 

According to our research, the content contained in this article is accurate at the time of writing. 
Infomation on this website is NOT bespoke advice to its audience and therefore does NOT constitute financial advice. 
Readers are encouraged to contact our qualified advisers directly for mortgage and protection advice. 
As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments. 
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. 
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