Life Insurance

There is no legal requirement to get life insurance, however if people depend on your salary or your time then life insurance is very important. There are many different types and options for life insurance, go through our checklist if you think you need it.

Guide to choosing Life Insurance


Do you need Life insurance?

If anyone relies on your salary or your time and you do not have sufficient life insurance cover with work then you should look at getting life insurance.


Decide on the type

Look at the types of insurance and decide which one is most appropriate for your circumstances.


Calculate your cover

You need to calculate the amount you want to be paid out to your beneficiaries, getting insurance for less than is needed will impact your loved ones when you are gone, but you do not want to pay for more cover than is necessary.


Decide whether to place it in a trust

If you put your life insurance in a trust for your beneficiary it will not contribute to the inheritance tax limit (£325,000). Also you can usually claim on the insurance before probate has been granted.


Purchase your life insurance

Check the quality of the insurance through reviews and defaqto ratings. You can check comparisons sites for the best prices. Ensure that your beneficiaries know where to claim for the insurance.

In this guide

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Insurance term

This is the number of years the insurance is valid for.

Guaranteed premiums

This are fixed costs you will pay throughout the insurance term which can not be changed by the provider.

Insurance cover

This is the amount your dependents will receive when an insurance is paid out.

Insurance premiums

This is the cost you will pay on a monthly or yearly basis for your insurance cover

Critical illness insurance

Insurance that will cover you when you become seriously ill. Each insurance will have exceptions for some conditions.

Death in service benefits

This is Life insurance from your employer and it is usually salary indexed, for example 4 times your salary. It is a benefit many larger firms offer, you can find out from your HR department whether your package covers it.

Term Life insurance

Lump sum that is set for a certain term for example over 25 years. The amount your beneficiaries will get will stay the same as will your monthly premiums, however if you do not claim during this period they will not receive anything.

Increasing term insurance

The payout increases, to take into account inflation. This is a less typical type of insurance.

Decreasing term insurance also known as Mortgage life insurance

Will allow your beneficiaries to pay off the mortgage, as it is linked directly to your mortgage its value will decrease over time. It is not the same as mortgage insurance which will pay your mortgage if you are unable to pay it.

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