Over a 3-part series, we’ll discuss the essential insurances that every UK family should have. We’ll start with the not-so-thrilling but utterly important topic of life insurance. We’ll explain what it is, why you need it, and how to pick the right policy so you can get back to more interesting things…like scrolling through social media and scoping out summer vacation destinations.
What is Life Insurance?
Life insurance is like a safety net that keeps your family from free-falling into financial oblivion if you meet your maker unexpectedly. Morbid, but true. This insurance pays out a lump sum if the unimaginable occurs during the policy term. That money can help your loved ones cover costs like:
- Paying off the outstanding mortgage so your family keeps the house
- Funding university or school fees so the kids’ education isn’t disrupted
- Bridging the income gap when your salary disappears
- Settling unpaid debts that would otherwise fall to next-of-kin
The UK government requires mortgage providers and brokers such as us to enquire if bereaved homeowners have appropriate life insurance or other financial safety nets in place. That’s how important having life insurance is. More people in the UK need coverage so that their families don’t fall into financial ruin after their deaths.
What’s more, locking in premiums when you are young and healthy means you get a more favourable policy. So getting covered is sensible even if you’re young and healthy as a horse!
Calculating Premiums
Premiums are based on a bajillion different things like your age (older folk pay more), health stats (fit folk pay less), risky hobbies (sky divers pay extra!), and whether you puff on ciggies.
Let’s explore a classic example…
Say Martin is 35 years old, a picture of good health, and wants a 20-year £100,000 policy to cover his family. Being young and lively, he’d pay around £7 per month. On the other hand, Agnes is 60 years old, high blood pressure, a former smoker for 30 years, looking for the same £100k coverage. She’ll shell out around £65 monthly.
A broker helps analyse how all these personal bits and bobs affect what you pay.
Types of Life Insurance
Like shoes, life insurance comes in different styles suiting different needs. Let’s have a brisk walk-through of the main options:
Term Life
This provides coverage for a set period of time, say 10 to 30 years. It’s the least expensive form and ideal for family security when kids are young or mortgages are large.
Whole Life
Coverage lasts your entire lifetime here. Premiums are higher because they incorporate a cash value savings component that builds over time.
Family Income Benefit
This offers monthly payouts to your family until a set end date, rather than one lump sum. Useful when replacing lost income is the main motivation.
Mortgage Protection
Specially crafted to pay off 100% of an outstanding mortgage if you pass during the term. Provides home security.
Joint or Dual Plans
Husbands and wives can combine coverage in one policy. Upon first death, money is released while the other partner continues coverage.
As you can see, choices abound! An experienced broker like Mark One Financial Services helps cut through the clutter by assessing individual circumstances before matching clients to the right life insurance plan.
Receiving Payouts
When the grim reaper eventually shows up, beneficiaries like your spouse, sprogs, parents or Del Boy uncle can file a claim pretty easily these days. Just send documents proving who you are and have a death certificate handy. Once approved, the payout gets made quickly – usually within a couple weeks. No nonsense about. This dosh goes straight to beneficiaries either in one lump go or through regular payments.
If you use us as a broker, we can ensure this process is smooth and hassle-free for your chosen beneficiary.
Seeking Expert Guidance
Navigating life insurance can be trickier than surviving the Crystal Maze. All sorts of policies exist with more alphabet soup than a canned food factory.
As a top broker, Mark One Financial Services has proper expertise with many years of experience. We can find you a well-crafted and tailored life insurance solution that fits your family’s needs rather than some off-the-shelf package. You wouldn’t buy the cheapest parachutte before sky diving would you?
From whole life to term insurance, we find the right mix of cover, premiums and benefits. Whether you’re 20-something and starting a family in your first home, or you’re looking to create a well-structured estate plan as you start staring down the big 5-0, there’s a solution for everyone.
So there you have it. The lowdown on securing your most valuable asset – your family – with life insurance this year. Tune in next time when we tackle critical illness cover.
Let’s have a no obligation chat to explore what’s possible. Contact us today.
Note – The information contained within was correct at the time of publication (January 2024) but is subject to change.