Life insurance is an important policy designed to pay out a cash lump sum to your family if you pass away. In return, you pay a set monthly payment (a premium), until the policy term ends, or you pass away. The proceeds from a pay out are often used to cover a mortgage, meet family living costs or rising funeral costs.
With 37% of the UK population having already bought or are currently thinking about securing life insurance, the financial security that can be provided to families if the worst happened could give many their own peace of mind.
Reassured are the UK’s largest life insurance broker, who opened their 2nd office in Manchester in 2017, due to the increasing surge in life insurance demand. This growth has since led to multiple offices being opened across the country – including Chester – and winning the “Contact centre of the year” award in 2020.
However, as the process of buying life insurance can be daunting for many, local Lancashire brokerage Reassured have provided 5 top tips to ensure you’re getting the very best deal for you and your family.
- Understand why you require life insurance
The need for life insurance usually comes from a sudden change in your life. This could be a positive change such as marriage or welcoming a new child into the family, or a negative one, like the death of a family member.
These circumstances will influence the type and amount of life insurance you require.
For example, those who’ve recently acquired a mortgage may want to secure cover until it’s paid off – ensuring that even if the worst were to happen, your loved ones wouldn’t lose the family home.
However, those who’ve welcomed a new child into their family, may want to secure cover until they reach adulthood, financial maturity or even until you pass away, to help cover your funeral.
Most life insurance providers can help you secure different life insurance products, depending on your personal requirements:
Term based life insurance – This can be level (the pay out remains the same) or decreasing (the pay out reduces over the policy term). Your monthly premiums are fixed, and the policy will last for a set period – between 2-40 years.
These are great options for interest-only or repayment mortgages, as the sum assured can reflect your remaining mortgage balance, and the policy length can match your mortgage term. This can help ensure your family wouldn’t lose their family home.
Life assurance (AKA whole of life insurance and over 50s life insurance) – Whole of life insurance is a policy which lasts for life, providing your premiums are continuously paid. Because of the assured nature of the product, it’s a fantastic option for covering funeral costs and leaving an inheritance. However, due to the pay out being guaranteed, premiums are significantly higher than term-based products.
If you’re a UK resident between 50-85, you would also be eligible to secure Over 50s life insurance. This product also guarantees a pay out and lasts until you pass away. However, no medical information is required, which is a standard with other life insurance products.
This means that those with pre-existing medical conditions (conditions which existed during or before the application process) won’t have these impact their premiums.
- Lock in lower premiums when you’re young
Premiums are calculated and locked in at the time of the application. To secure the cheapest premiums, look at obtaining life insurance at a young age.
In many situations, good health is synonymous with youth, and your premium prices will always reflect the risk imposed on the insurer.
However, don’t be discouraged if you’re in your 40s or 50s – age isn’t the only factor considered. Your smoking status, weight and occupation can all significantly impact your premiums and cover options.
For example, a 40-year-old smoker (who is in good overall health), who wishes to secure £100,000 of cover over 20 years could be quoted around £15.52 – compared to £9.69 for a 35-year-old.
However, if that 40-year-old didn’t smoke, this quote would be £7.87 – working out cheaper, despite being older.
Improving your fitness and removing damaging lifestyle habits (such as smoking) can have a drastic effect on both your health, and the amount you’ll pay for life insurance.
Life insurance brokers compare quotes from some of the top providers to ensure you’re securing the best deal.
- Assess your current financial situation
Like most financial plans, life insurance policies are terminated if premiums are consecutively missed. Therefore, it’s important to make sure any policy you secure is affordable in the long-term, while providing the cover you need.
You may require £10,000 of cover for your funeral costs. But if you already had £5,000 in savings, a lesser amount of cover could be secured to save money.
A smaller sum assured usually results in cheaper premiums, so it’s worth considering all your other assets. It sounds like a simple solution, but it’s one many people don’t consider.
This is also applicable if you have a transferable pension or death in service benefits through your occupation.
- Don’t lie on your policy
Completing your application accurately is the most important part of the process. Lying on your application essentially voids your policy and wastes your selfless investment.
Intentionally providing the wrong information and withholding details is known as “intended non-disclosure”. This would invalidate your policy and lead to your loved ones pay out being denied.
Being an active smoker but saying you don’t smoke, or not providing information about a pre-existing medical condition are examples of this.
If there was evidence of a potential non-disclosure discovered upon your passing, insurers can delay the payment to gather additional information. Ultimately, if non-disclose is discovered, your policy will be voided.
It’s also possible to unintentionally provide the wrong information and trigger non-disclosure.
The best way to avoid this is by completing the application with a life insurance broker, like Reassured, who can ensure your information is inputted correctly.
- Securing life insurance with a broker
Like most forms of insurance, quote comparison is an essential part of the process. The last thing you want is to discover you could have secured cheaper premiums.
Talking to a life insurance broker can make a substantial difference here. Reassured have local brokerages in both Manchester and Chester who can locate personalised quotes for your individual circumstances.
Using a quote comparison service, like a broker or a reputable comparison website, can remove much of the time and stress included with securing cover – making the process hassle free and potentially cheaper overall.
