Is it time to consider life insurance?

Life insurance can provide invaluable peace of mind and financial security. However, FT Adviser reports that only 48% of UK adults have life insurance. 

We're exploring common reasons to take out a life insurance policy and the benefits a policy can bring.

What age should I take out life insurance?

The truth is, there is no specific age you should take out life insurance. Whilst you do have to be over 18 years of age, life insurance can be purchased at any time (although insurers have different maximum age limits).

Often, people start to think about life insurance as they get older, and consider the need to protect their family but having life insurance earlier in life comes with many benefits, especially preparing you for the unexpected. 

Unsurprisingly, taking out a life insurance policy earlier in life often comes with lower premiums and provides peace of mind. Despite this, Legal & General Life Insurance reported only 26% of 23-38-year-olds have life insurance.

As you get older premiums can be expected to be more expensive as you become considered more of a risk to insure.

Who can benefit from life insurance?

Anyone can benefit from the peace of mind and financial security that life insurance offers.

However, it can be particularly beneficial for anyone who has someone who relies on them financially or people with debts such as a mortgage. There are many advantages of life insurance, these include:

• Peace of mind that should anything happen to you, your loved ones would be taken care of financially
• Financial security for your family and/or loved ones
• Comprehensive cover for all stages of life
• Debt and mortgage protection
• It can be affordable, you can choose your payments and level of cover to suit your needs. Nine in 10 people overestimate the cost of life insurance.

Common reasons to take out life insurance

There are some common trends and life milestones which encourage people to purchase a life insurance policy.

Buying a house: Buying a house is one of the main motivations for people to invest in life insurance.

If the policyholder was to die whilst the mortgage was still being paid, this would be left to a loved one. Life insurance can cover that cost for the mortgage making life easier for loved ones left behind.

It's also worth noting that whilst life insurance isn't legally required to get a mortgage, it can provide great peace of mind. 

Starting a family: When starting a family, the priority may be protecting the family and that includes financially. Life insurance could provide protection and security for the policyholder's children and partner in the event of their death.

Covering funeral costs: Another key reason people choose to take out life insurance is to cover funeral costs. This is a way of supporting loved ones and your family, as they won't have to pay it out themselves. The average cost of a basic funeral in the UK is £3,953.

It is worth considering financial responsibilities and how people left behind would cope in the event of death.

Is there a maximum age?

Most insurers will accept applications up to the ages of 70-90 but this can vary by insurer.

Taking out a policy later in life typically comes with a higher premium. However, it is never too late to take out life insurance and start to benefit.

Some insurance providers offer specific over 50’s life insurance. These plans usually have a 12 or 24 month payout wait, so it may be worth considering life insurance earlier in life.

How long will the policy last?

Different levels of cover for a life insurance policy means you can choose how long you'd like to be covered. Whole of life and term life insurance are usually the two options you'd need to consider when comparing life insurance.

Term life insurance means you choose an agreed term for your policy. This could be 10, 20 or 30 years for example, it will only cover a specific period of time it is needed for.

Often this could be used for things like raising children or paying off a mortgage.

It will only pay out if you die during the term of the policy, therefore, it may not pay out at all, but provides peace of mind and financial security for that set period of time.

Term life insurance will typically come with a lower premium for this reason.

Whole of life insurance will cover you for your whole life and not expire, assuming you continue to make your premium payments.

Whole of life insurance works differently in the fact that it is likely to pay out and covers you for life. 

It is designed to protect funeral costs, inheritance tax liabilities or simply to leave some money to loved ones when you pass.

It is concerned more with covering the liabilities that are sure to arise on your death, regardless when that might be.

Is life insurance worth it?

A commonly asked question, is life insurance worth it? We think so.

If you have anyone that relies on you financially, if you have a mortgage or want to make sure funeral costs are covered, then life insurance is a great option.

Although it’s never nice to think about, life insurance plays a great role in preparing for the future and protecting the ones we care about the most.

You never know what’s around the corner and it's always worth considering what options are available to you.

Whether you’re new to life insurance or have a policy and want to check it’s the most suitable for you, our expert advisers are available to offer a free, no-obligation life insurance quote and recommendations on 01285 864670.