When you arrange life insurance that delivers real financial protection for you and your family, you’d be amazed at the peace of mind that comes with it. Leaving money to support loved ones in the event of your death is important to many people, particularly when there is a mortgage that needs to be paid off and there are children. But how do you find the right life insurance cover for your circumstances?
Think Plutus is here to help, and we have composed this guide to try and answer all the most common questions regarding what life insurance is and how it works.
As always, please feel free to contact us at any time if you have questions or wish to start your search for the right cover with the help of our expert advisers.
What is life insurance cover?
When you take out life insurance, you form an agreement with your insurer that if you meet the policy’s terms and conditions and keep up with your regular premiums, they will release a lump sum to your family in the event of your death.
Many people choose this option as a way to provide financial protection for their family if they are no longer around. Once released, the beneficiaries can spend the money however they choose, whether that be to pay off a mortgage, keep up with household bills or cover funeral costs.
How does life insurance work?
Life insurance comes in a wide range of shapes and sizes but, typically, you choose your life insurance product based on your needs and circumstances. When choosing your life insurance policy, you will need to define how much your agreement will cost, the amount that is paid out to your beneficiaries and the length of the term of the agreement.
As such, you will have to answer a number of questions about your health, your lifestyle and your medical history. Life insurance providers make their profits by investing the money you pay them for your premium in hopes that they will make more money than they would have to pay out if a claim is made. It stands to reason that a healthier policyholder is less likely to make a claim, so the insurer is more likely to offer lower premiums.
How do life insurance policies work?
A life insurance policy is a contract you take out with an insurance company. This contract broadly states that, in exchange for premium payments, the insurance company pledges to release a lump-sum payment, called a death benefit, to your named beneficiaries upon your death.
If you’re considering taking out life insurance, you can put yourself in a stronger position by fully understanding all the information within life insurance policies. It’s also important to know what effect the contractual terms might have on you.
If you want a more detailed explanation of life insurance policies, contact Think Plutus and speak to one of our specialist advisers. Our experts can talk you through the importance of life insurance and explain the ways different policies would affect your family.
How is life insurance paid out?
Before you make any decisions, you should understand how life insurance policies pay out. It does not happen automatically; a claim must be registered with the insurer when the policyholder dies.
To inform the insurer that you wish to make a claim, you will need to contact them directly by telephone or email. Your policy documents should have the contact details you need, but if you don’t have them to hand then you can find those details on their website or speak to an insurance adviser for assistance.
Anyone can set the claim in motion but the recipient of the funds will be the person defined in the policy or the deceased’s will.
When do life insurance policies pay out?
Before releasing the funds, an insurance company will probably need to ask a few questions in order to process the claim. Once the handling of the claim is complete, there could be a wait of up to 60 days for the money to be transferred to the beneficiary.
The information the insurer may need could include:
- The name of the policy-holder (the deceased)
- The date and cause of death that is noted on the death certificate
- The policy number (if you are able to find it)
- The name and contact details of the claimant
- The relationship of the claimant to the deceased
If a life insurance policy is something you might be interested in, but you need to know how long it would take to pay out, ask Think Plutus to help you find the life insurance policy that works best for your needs. We are independent financial advisers with all the tools, experience and knowledge to help you find the best cover available, and we are regulated by the Financial Conduct Authority.
Do I need life insurance?
Some consider life insurance to be an expense that isn’t truly necessary, so the question is: do you really need it?
The answer to that question, for most people, is that it is up to you. But you should know that, for many people, having a policy in place has meant that although they passed away, their family was able to pay the mortgage and continue living in the family home.
Many families are dependent on the income that a particular person brings home. Losing this income can be disastrous, particularly in a situation where that individual has died unexpectedly. For this reason, many mortgage lenders stipulate that borrowers must take out a life insurance policy as part of the mortgage agreement. None of us wants to think about someone we love passing away but by taking out life insurance we can provide a financial safety net that would prevent financial hardship if the unthinkable were to happen.
If you’re not buying a home and don’t currently own one, what reason is there to take out life insurance? Let’s explore some other life events that might make a life insurance policy beneficial.
When should I take out a life insurance policy?
There are many reasons why people should consider life insurance, but certain milestones or life events can remind us of how it could be beneficial. The following circumstances often trigger thoughts about life insurance:
One of the many benefits of getting married is the knowledge that your spouse will offer support and companionship in sickness and in health. Unfortunately, more than 700,000 women are widowed each year, not to mention the men whose wives die, and the surviving partner is often left having to tackle the financial burden of a mortgage and other life expenses.
In order to protect against this hardship, many newlyweds take out life insurance as a way of supporting their spouse financially in the event of their death.
Having a baby
Raising a child is an expensive journey, even without considering costs like private education or university fees. Some people need the reassurance that if they were to pass away, their children would be provided for, either through an inheritance or some money to cover expenses and ensure they never go without.
Whilst caught up in the excitement of welcoming a new baby to your home, it can be easy to forget about the importance of life insurance. It may not be something you want to think about, as the idea of missing out on your child growing up is unpleasant.
But you should be mindful of how life insurance could help you enjoy the present without the fear of financial difficulty in your child’s future.
In the UK, the average cost of a funeral is £3,700 and many of us don’t want to burden our loved ones with that huge expense. Depending on your circumstances and the terms of your policy, those funeral expenses could be covered by a life insurance payout.
To have a chat about the pros and cons of life insurance and learn how simple it is to apply, contact Think Plutus for a free, no-obligation consultation. Our experts will be able to answer any questions you may have.
How to choose a good life insurance provider
If you’re searching for a good, reliable life insurance provider in the UK, the input of an expert adviser can be invaluable. We can discuss the differences between policies and offer professional advice on which would be the best fit for your needs.
Before you start shopping around with different providers, you should think about:
- The amount of cover you wish to insure your life for
- Whether you need to have a guaranteed payment on your death or you only need life insurance for a specific period of time (such as the term of your mortgage or until your children reach a certain age)
- How you want your family to receive the money – would a lump sum be best, or would a regular monthly family income benefit be better?
At Think Plutus, we compare customer reviews and satisfaction levels alongside the rate of successful claims with different providers. These are important factors to help us determine the life insurance provider that will be best for your needs. Contact us today for expert guidance about getting the best life insurance deal in the UK.
What type of life insurance do I need?
There are various clauses and conditions in different personal life insurance policies so you need to think about the purpose of your life insurance. You should also know what needs to be included in your agreement to give you the necessary cover.
The sheer amount of options for life insurance cover can be a little overwhelming and it can be helpful to think about whether you want only yourself to be covered, or whether it would be better for both you and your partner to be included. If the latter option is more sensible, you may wish to explore joint life insurance policies.
Think Plutus can walk you through the various options that are available to you and offer tailored advice on which would be the best fit for your needs. Our advice is always confidential and you can arrange a free, no-obligation chat to speak with an independent expert today. We will be able to answer your questions and find you the right level of cover at the best available price.
What to look for in a life insurance policy
When taking out life insurance, it is essential that you are mindful of the key factors that will impact on what your beneficiaries receive.
Clarity is paramount with regards to life insurance, so make certain you understand the following before putting pen to paper:
- Who the life insurance will pay out to
- How long it will take before the life insurance provider releases the funds
How long does the policy last?
You should also pay close attention to the length of each agreement you are considering – you’d be surprised how much this can vary. Most people don’t realise that some life insurance policies are restricted to a certain period of time (known as ‘term life’) whilst others can stretch over your lifetime.
For some policyholders, that shorter agreement is beneficial – perhaps their life expectancy is shorter, for example. For others, a lifelong agreement is preferable. The longevity of your policy is one of the key factors that affect the price you pay.
It may be that having a healthier lifestyle and a longer life expectancy can result in lower premiums for your life insurance since these factors could be perceived as lowering the likelihood that you will make a claim.
Things to watch for with life insurance
Like with any financial product, you should never take out life insurance without great thought and expert advice. This is because there are some key factors that need to be considered, and if you make the wrong choice it could have an impact on your life.
Most life insurance providers are cautious about providing cover for customers who have health issues. If your risk level is perceived as higher than average that may be a red flag – issues like obesity, heart disease, diabetes, high cholesterol, depression and various other chronic conditions can all be a concern for insurers.
Serious health issues like cancer, or having multiple health issues simultaneously, could lead to very high premiums or even rejection of your application.
Having said that, if you have a health condition or reduced life expectancy, this doesn’t necessarily mean you will have to pay extortionate amounts for life insurance. There are insurers who specialise in arranging cover for customers with health conditions.
To learn more about whether your pre-existing medical condition could rule you out for life insurance, or to find affordable cover from a specialist adviser, contact Think Plutus.
Terms and conditions
Unfavourable terms and conditions for life insurance policies are often buried in the small print and it can be laborious to uncover them. This is why many people prefer to have an adviser do this work on their behalf.
With experience and a keen eye for detail, insurance advisers can zero in on any terms that might cause problems if the time comes to make a claim. This enables them to forewarn you of the issues and advise on better alternatives or ways to avoid claims issues down the line.
To get this invaluable expertise on your side, speak to one of the specialist advisers at Think Plutus.
How to take out life insurance
The points below will outline the various avenues to buying life insurance. Contact us at any time for tailored advice for your situation.
Buy life insurance online
The internet is always a valuable pool of information, particularly when you are in a hurry to get something done. That said, it is not uncommon to find complex and sometimes conflicting information when you research online, making it difficult to be certain about what data is accurate.
Life insurance rates can frequently change and some websites will not offer the most up-to-date or accurate information. Thus, by using the internet to find life insurance policies, you are at risk of overlooking the best deals for your circumstances, particularly if the advice you get is from a site that is linked to a certain insurer.
There is a more reliable and trustworthy way to find the right deals…
Have an insurance broker find the best deals for you
Independent insurance brokers like Think Plutus have whole-of-market access to the full database of current providers and rates. The information we use is updated in real-time so we always have an accurate picture of the market as it stands.
With this real-time accuracy, we can ensure customers never miss out on the best rates whilst still having access to a wide range of life insurance schemes. If you have any doubts or uncertainty about getting life insurance or where to buy it, contact Think Plutus today and our advisers will be able to talk you through everything and perform a forensic search of the market to identify the perfect deal for you.
Speak to an expert life insurance adviser
To get a true picture of the right life insurance policy for you and your loved ones, there is no substitute for personal, independent, expert insurance advice.
Speaking with a specialist adviser at Think Plutus could make a huge difference to your life, and we always approach the subject of your death with compassion and discretion. Our input will ensure you make the right decisions and get the best possible price to meet your requirements.
For life insurance advice you can depend on, Think Plutus.