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How much does life insurance cost?

The average monthly cost of life insurance is £14.56*, according to MoneySuperMarket data.

The cost of life insurance can depend on the type of cover you choose (single or joint life insurance) and the term of the policy (level or decreasing term).

Your monthly payments will also depend on the amount of cover you take out and your health and lifestyle.

*The average cost above is based on a level term, life-only (without critical illness cover) single person policy. MoneySuperMarket data November 2018 to October 2019.

How much life insurance do you need?

The amount of life insurance you take out should ideally be enough to cover your mortgage repayments and the needs of your family if you were no longer around.

The average cover amount that consumers purchasing single level term life insurance look to take out is £140,000. The average cover amount that consumers searching for joint life insurance look to take out is £175,000, according to MoneySuperMarket data from November 2018 – October 2019. 

When should you get life insurance?

It’s worth thinking about life insurance if you have a partner or child who relies on you financially, and they would struggle to pay the mortgage, rent or other bills if you were no longer around. 

Do you need life insurance to take out a mortgage?

Life insurance isn’t a legal requirement, but most mortgage lenders will ask you to take out appropriate cover. You don’t need to take out life cover from your lender – you can buy it elsewhere.

What does it mean to put a life insurance policy in trust?

Putting your life insurance policy in trust lets you name the people you want to receive your life insurance payout (your trustees).

There are different types of trusts available depending on your individual or family circumstances.

Putting your life insurance policy in trust also protects the payout from inheritance tax. 

When should you update your life insurance policy?

It can be a good idea to think about updating your life insurance policy if:

  • Your health or lifestyle has changed

  • Your financial situation has changed (your salary or mortgage might have increased)

  • Your family has grown 

  • Your relationship with your dependant has changed – although you will need to check your insurer can do this for you

If you are not able to update your existing policy, you may be able to find a policy with a different provider that better suits your new situation. It’s always a good idea to get a personalised quote to see if your current insurance is the best option that’s available to you.

Can you get life insurance if you have a pre-existing medical condition?

If you have a pre-existing medical condition you should still be able to get life insurance, but you may need to compare your options online. 

If you have a more complex condition and you’re finding it difficult to get a price online, a broker or adviser – such as our partner LifeSearch – can help you find a provider that will cover you.

You’ll most likely need to share additional medical information and copies of any tests with the provider to help them understand the risk level of your condition. You’ll be asked to sign a medical release form and the insurer will then request this information from your doctor.

You can end up paying more because of this risk. But it’s important to declare any pre-existing medical conditions when taking out life insurance because if you don’t, your insurer can refuse to pay out for any claims. 

What happens to your life insurance policy if you can’t meet your payments?

If you are not able to work because of an illness or injury – which then means you’re unable to afford your monthly life insurance payments – a waiver of premium could mean you’ll be covered during this time.

This will need to be added to your policy as an additional level of cover and it will need to be taken out from the start of your life insurance policy.

Can you claim on your own life insurance policy for a terminal illness?

If you’ve been diagnosed with a terminal illness and a doctor has given a prognosis of less than 12 months to live, you may be able to make a terminal illness claim on your own life insurance policy.

This means you would receive the payout now – instead of your dependant receiving the payout once you’ve passed away – and this can help to cover the cost of not being able to work during your final months and getting your affairs in order.

Some insurers offer terminal illness cover as part of their standard life insurance policy. Other insurers require you to add terminal illness cover as an extra level of cover. There will be terms and conditions with both options so you’ll need to read the policy documents to make sure you would be covered.

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