Yes or no? Quick answers to your questions on life insurance

Life insurance is essential for many people because of its simple purpose - it pays out a cash sum to their dependents if they die.

Here are some quick-fire answers to the most common questions you may have about life insurance…

Do insurance companies pay out?

Yes. According to the Association of British Insurers, in 2023 UK insurers paid out on more than 97% of -all protection insurance claims - a massive £7.34 billion. As long as the terms of the policy are met, an insurance company will pay.

Would I have to pay income tax on a life insurance payout?

No. Your family won’t have to pay income tax on a payout, but it's worth bearing other possible tax implications in mind. For example, depending on the circumstances, a life insurance payment may need to be included in the value of the estate when calculating any inheritance tax.

Can I insure myself and my partner on one policy?

Yes. Many couples decide to take out a joint life insurance policy as it is often the most cost-effective option.

Is there anything that might prevent an insurer paying out?

Yes. But this usually only happens because an existing health condition, or relevant facts such as smoking or drinking aren’t disclosed when the policy is first taken out. You may see these referred to as ‘non-disclosure’ or ‘misrepresentation’.

Is the claim always paid as a lump sum?

Not always. Some life insurance policies may offer the choice to receive the payout as an income.

Do insurers offer support beyond a financial payout?

Yes. Many insurers offer access to support services, which can provide professional counselling, support for stress and financial guidance, plus many other things.

Can I cover my children on my life insurance?

Yes. It may be possible to add a child or children to your life insurance policy, but it will depend on the insurer and the policy.

Can I change my cover if my circumstances change?

Yes. You may buy a new home, have a child, or get married (or all three), and wish to increase your life insurance as a result. Speak to your insurance company.

Do I get any money back when the life insurance policy ends?

No. Once a term life insurance policy runs its course without a payout, no money is returned.

Is my life insurance policy protected?

Yes. Your life insurance policy is protected by the Financial Services Compensation Scheme (FSCS).

What now?

Life insurance depends on your individual circumstances. Read our article on common scenarios where you may need life insurance to help you decide.

Find out more about Zurich life insurance.