Life Insurance - what's it all about?

Get to grips with the basics

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We all need some peace of mind our family will cope financially if we are not around.
Life insurance may not be the top of your to-do list, but we think it's a must have.

In the red corner Mr & Mrs Optimistic

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It’s one thing to know what insurance does, but another to know when YOU might need cover. It’s human nature to hope our future is filled with positive outcomes and nobody would change that. But this welcome trick of the mind can see people underestimate their need to be secure. 

This article will tell you more about how our brain’s best intentions can leave us vulnerable.
Read our article

How do I choose the right cover?

These five questions will help you find the right life insurance, and keep your family’s day-to-day life as normal as possible if you’re not around.

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What do you want to protect?

Life insurance pays a cash sum to help your family with whatever needs they have. This could be household bills, childcare, or a mortgage. You should also think about other potential costs, such as supporting children through education.

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How long do I want protection for?

Your policy can last however long you need. That might be until you retire, or you've paid off your mortgage, or up until the day you die. You just need to figure out what works best for you.

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How much can I afford?

The cost of your insurance depends on how long it lasts, how much protection you want, and your personal circumstances. A smoker, for example, pays more than a non-smoker.

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Do I want protection against critical illness?

Life insurance isn't just about dying. Some policies help to financially protect you if you suffer one of the critical illnesses covered. Your children may also be covered too.

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How much do I need?

The right amount of financial protection is important. Too little and your family will be left wanting. Too much and you could waste your money. Luckily we've created a neat tool to help you work out how much you need. Find out more

A few more questions?

How do I make a claim?

You’ll probably be under great stress if you’re making a claim. So insurance companies try to make the process as simple as possible.

You’ll need to contact the company to let them know, then fill in a claim form. They’ll want you to send them: Original or certified copy of the death certificate, Policy document, Completed claim form. It’s probably best to use registered post or recorded delivery.

If the insurance was written in trust (with you as the named beneficiary), you should receive your payment within a matter of weeks. It could take longer if the payment passes through the deceased’s estate.

But will it pay out?

Trust us, we’ll pay out all valid claims. Our statistics speak for themselves - in 2016, we paid out 98% of our death claims.

I don’t really understand the jargon

So, maybe we’re guilty of using lingo that’s not user-friendly from time to time (oops, was that jargon?). Here’s some of those life insurance terms you may come across and our translation to help you out.

Policy

The legal contract you, the planholder, have with the life insurance company. You accept the terms and conditions, pay the premiums and you’re covered. Any payout depends on what type of plan you buy and any exclusions. We like to use the term ‘policy’ rather than plan– it sounds a bit friendlier. 

Single life

One life, one plan. Take out a single life plan to provide for the people you treasure if you die or suffer a critical illness. You and your partner can each take out a single life plan – or you may opt for joint life cover. With single life you each have a separate plan, which can have advantages over joint life, for example if you separate.

Joint life

Covers two people – so you and your spouse, or partner, are covered under one plan, with one premium. A joint life plan only pays out once, so if both of you die at the same time, your dependents only get one payout. If you each had a single life plan, there would be two payments.

Life insured

The life insured is the person (or people) protected in the event of a critical illness or death: you, your partner or both.

Premium

A fancy word for payment. The amount you’re expected to pay regularly for the cover. So, a premium of £20 a month means you’ll need to pay £20 a month. Simple!

Underwriting

The process an insurer goes through to decide whether to offer you life insurance, looking at potential risks like your age and past medical history. Also helps work out how much you’ll pay for your insurance.

Waiver of premium cover

Many plans offer waiver of premium or payment cover, which means if you’re unable to work due to illness or injury, your payments will be made for you.

Beneficiary

The person who receives the death benefit, or payout, when the life insured dies. You can name anyone as a beneficiary – a partner, child, or relative. You could even have your proceeds paid to a trust or your favourite charity. If your original beneficiary isn’t alive to receive the payout, you can name someone else as a beneficiary.

Claim

What the beneficiary needs to do to receive the payout under a plan. Insurance companies are used to dealing with life insurance claims so the process is usually pretty straightforward.

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