We use cookies to give you the best experience and help us improve our website.

Find out more about how we use cookies.

Speak directly to our team

01603 967967
Latest News How does life insurance work?

How does life insurance work?

How does life insurance work

According to a recent survey by SunLife, nearly 50% of us haven’t made adequate provision to pay for our funeral when we die. And with the average cost in the region of £5,873, that’s a hefty bill for your loved ones to pay – especially if your estate isn’t large enough to cover it.

Making sure this final expense is covered is just one of the benefits of taking out life insurance. Funeral costs aside, it’s important to ensure that your family and any other dependents are financially secure, especially if you die unexpectedly. While it’s not a thought anyone wants to dwell on, this happens to thousands of individuals in the UK every year.

Sensitive subject

Although it is inevitable, death is a sensitive topic. And making plans for what happens after your death is difficult to address. It’s even harder to discuss the matter openly with your partner or children, so avoiding the subject is entirely understandable. Nevertheless, it is a reality that should be faced, especially if you are the main breadwinner in the family.

Securing adequate life insurance is a way to be certain that the loved ones who rely on you will not suffer financial hardship after your death. Policies are available that pay out a lump sum to your named dependents when you die or guarantee a fixed regular income for a specified term. In both cases, the amount paid out (sum assured) is for you to decide, although the more money you insure for the higher your premiums will be.

When deciding how much you want to be insured for, consider what you want the policy to pay for, and how long it needs to last. You may want it to pay off your mortgage, cover rent on a property, or pay household bills, provide for child maintenance and, of course, pay funeral costs. Other possibilities include school or university fees. One option is to insure for the equivalent of your annual salary for a specified period.

Consider what you want the policy to pay for, and how long it needs to last

Level of risk

As well as the overall sum insured, other factors affect the amount you pay in life insurance premiums. These relate to the level of risk involved and the amount of time the cover will be in force. The younger you are when you take out a policy, the less you’ll be asked to pay. Your lifestyle – especially if you smoke – your general health, medical history, your occupation, whether you engage in dangerous pursuits like extreme sports and where you live can also affect the cost.

It’s crucial that you’re completely honest about your health and medical history when you apply, otherwise the policy may prove invalid. One of the advantages of using an independent financial adviser is that they will take the time to find out about your circumstances so they can find the most appropriate solution.

They will take the time to find out about your circumstances

Life insurance should be part of your financial planning for the future, in order to care for and protect your family when you’re no longer around. It’s a difficult subject to consider, but knowing you have made adequate provision will give you greater peace of mind as the years go by.

Don’t hesitate to get in touch if you have questions about life insurance. We are always pleased to help and can provide advice tailored to your personal circumstances.

Related products: Personal Insurance