Posted on Jul 12, 2021

Life insurance

The Evolve FS team answer some of the most common questions we get when clients talk to us about life insurance.

Do I actually need life insurance?

The best way to answer this question is to ask yourself: “Would my partner and children be able to continue living in the same house, and be able to cover the costs of the mortgage and bills, if I passed away?”

If you’re not sure that the answer is yes, then you should speak to us about life insurance.

Can I get life insurance specifically to cover my mortgage payments?

Yes, many people decide to opt for a life insurance policy that runs for a fixed period of time. If you pass away during the period the policy is active, then the insurance company will pay your nominated dependants an agreed amount of cash. These products are known as term life policies.

When people take on term insurance specifically to cover a large debt, such as a mortgage, they often take on a policy that decreases over the lifetime of the product, so it falls into line with the amount of money still owed to your mortgage provider.

For example, if you took out a £200,000 decreasing term policy over a twenty-year period, and you passed away after ten years, your dependants would receive around £100,000. Of course, because the pay out decreases over time, so does the premium you must pay.

It’s also possible to get term life insurance that increases the size of your pay out over time, for example to combat inflation.

What if I don’t have a mortgage, but want to be able to cover the cost of my funeral?

A whole life insurance policy, which will pay out no matter when you die, can provide money to cover things like your funeral, or settling tax issues relating to your estate, if necessary.

These policies, also known as life assurance, tend to be more expensive than fixed term life insurance. It’s also possible, if you live a longer life, to end up paying more money in premiums over the years than would be paid out once you’ve passed away.

Can we get joint life insurance?

Yes, you and your partner could share a joint insurance policy. If one of you passes away, the other will receive the money. These policies usually work out cheaper than having two separate life insurance policies. However, the drawback is that joint life insurance cover will only pay out for the first death.

Does life insurance cover me if I become seriously ill and can’t work?

No, life insurance is designed to only pay out after you die. However, many providers will offer you additional income protection, and critical injury insurance, during the process of selecting a life insurance policy.

Will my health conditions affect how much my life insurance costs?

Insurance providers will consider a range of factors when calculating your premiums. For example, your current age, alcohol intake, general health, whether you smoke, and your family medical history, will all be taken into account. They may also look at how risky your occupation is too.

It’s important to note that you should always be honest with your insurer. For most term life insurance, you won’t be asked you to take a medical check up before you receive your policy. However, once a claim is made, your insurance provider will check your medical records. If you haven’t given them the full picture, your dependants may not be entitled to any money.

I already have life insurance. Is it possible to switch to a better policy?

Depending on your age, and current health, you may be able to switch to a policy that offers better value. If you’re considering making a switch, then get in touch with us first, and we can help you see if there’s a better deal out there. It’s also important never to cancel your policy without making sure your new policy is active first.

Ready to give yourself peace of mind, and ensure your loved ones are financially covered if something happens to you? Whatever your budget, our friendly and fee-free advisers at Evolve will take you through your options, and secure you a great deal. Speak to us today.