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Do you really need Life Insurance?

Many of us don’t wonder about what will happen to our money after we die. We won’t be around to spend it after all.

Or because we are young and healthy, we believe we won’t have to worry about our death for many years yet and so, like with making a will, we delay thinking about it.

The quickest and easiest way to decide if you should start thinking about life insurance is this one simple question: If I were to die tomorrow, how would this financially affect my family?

Taking steps now might save your loved ones from financial difficulty in the future. Life insurance is a policy that can give your family or dependants financial security and for this reason, it is often called the most essential financial product you can buy.

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60-Second Summary – Do you need life insurance?

We’ve put together a guide to help you decide if you personally should be looking at getting life insurance, depending on your circumstances or what stage you are at in your life.

  • Think about your household income and how your family would cope financially in the event of your death. Life insurance can provide vital financial support in paying for important expenses like funeral costs and mortgage repayments.
  • If you have recently gotten married or had a child, it’s worth at least thinking about getting life insurance. Life insurance is the #1 way to protect your family financially and give you peace of mind.
  • Buying a new home is good opportunity to review your life insurance or buy a policy if you don’t already have one. You can buy specific mortgage life insurance policies which will ensure that your mortgage can be repaid even if you were to pass away.
  • If you’re not sure about life insurance and if it is right for you, you can get free, friendly advice from a life insurance expert.

Here are several key things to think about when considering life insurance and how it might impact your family.

I am the main breadwinner (the main source of household income)

If you are the main financial support for your household and were to pass away, life insurance may be crucial to your family being able to continue paying the mortgage or rent, grocery shopping, and other daily expenses.

Term insurance is the most popular type of life insurance and you can cover your life for a certain period, for example, twenty years.

Most life insurance pays out a single tax-free lump sum but there is also the option of having the money go to your family in regular monthly payments as a salary would. This is called family income benefit and can be a more cost effective way to protect your family financially.

I am a stay at home parent

You may be a stay-at-home parent and rely on your partner’s salary for financial stability. Likewise, your partner may rely on you for full-time childcare. If you were to pass away would your partner be able to financially cover the current household expenses and childcare?

It may be worth getting a more affordable life insurance policy for yourself and one with a bigger pay-out for your partner.

My partner and I bring in the same amount of money

If you and your partner are both bringing in a salary, life insurance might not seem like a necessity. However, if your partner were to pass away, would your salary be enough to cover your mortgage or rent, daily expenses, and, if you have children, childcare? Would your partner be financially secure if you were to pass away?

You could get two single life insurance policies or there is also the option of joint life insurance. This can seem like the more affordable way to cover you both but be aware that once the first half of the couple dies, the surviving partner will not be covered and will have to get a new insurance policy.


I have life insurance through work (death in service)

You may have life insurance through work if they have a death-in-service cover. This means if you die while employed by the company, your family will receive a lump sum. This cash sum can be as much as five times your salary.

This is very useful but there are several disadvantages. The main one is that if you ever leave the company or are made redundant, your insurance will immediately come to an end. As you would be older it might be harder to find affordable insurance.

Secondly, you can’t choose how much cover you have and the pay-out for regular insurance is normally higher than it is for life insurance through work.

You might want to take out additional life cover so the two policies can cover your family’s needs completely.

Lastly, death-in-service cover cannot be assigned to cover your mortgage. Would your family be able to continue with their mortgage payments and keep the family home if you were to die suddenly? If not this may not be enough to cover you.

Here are some of the main things that you need to consider for your family and what life cover can do for them.

I have young children

If you have young children it would be a good idea to have life insurance at least until they come of age and can financially support themselves. For this, you might want to look at term insurance, the most popular type of life insurance.

Term insurance will cover you within the term agreed only. If you pass away during this time then your family will receive a pay-out. So, for example, if you think your child will be financially independent in twenty years, you can take out life insurance for this exact amount of time.


I have no partner or children

If you are single with no children, there are only a few reasons you might want to take out life insurance. Of course, this is not definite for everyone and even if you do not have a traditional nuclear family, you might have close friends, siblings, or nieces, and nephews you want to leave your pay-out to.

If you would like to leave your assets or property, with everything paid off and in order, to a friend or charitable organisation, then this is where life insurance would come in useful. Another reason is funeral expenses. Many people in the U.K. are not aware of how expensive funerals can be and even the most affordable can cost thousands of pounds.


My children are grown (no longer dependent)

Even if your children are old enough to fend for themselves, you may want to take the steps to protect them financially in the future at what is sure to be a stressful time.

The policy that will cover you until the day you die is whole-of-life insurance. This insurance could help cover your funeral costs, your children’s daily expenses and the costs linked to your death, such as the inheritance tax.

In the UK, the inheritance tax is due on estates worth more than £325,000. If your estate exceeds this, it will be taxed. As the pay-out from your life insurance counts as part of your estate, this can push you over the threshold.

However, there is a straightforward step you can take to avoid the inheritance tax and that is setting up your policy in trust.

Life insurance is harder to get the older you are and if you are over 70, you might find it harder to find cover. Funeral insurance is policy that pays-out whenever you die, just like whole-of-life insurance, and will at least give your children financial support in funding your funeral.

There are also several other points to consider with life insurance and how it can help you at all stages in life.

I am over 50

Although it is better to look for life insurance early on, there is an insurance policy tailored just for your age group called over-50s life insurance.

Anyone will be accepted for this and you do not need to worry about passing medical or lifestyle checks.

As with whole-of-life insurance, a pay-out is guaranteed as this will extend until your death. You may want to consider this if you would like to financially help your family after your pass away with living or childcare expenses or even just to help pay for your funeral.

I am looking to buy a house

Although it is not a legal requirement for you to have life insurance to get a mortgage, many mortgage lenders will request that you do.

This can also give you peace of mind that your family members can continue to live in their homes if you suddenly pass away. Many people choose to get decreasing-term life insurance for this reason.

It is a term insurance policy which means you can set it for twenty years, for example, or however long your mortgage repayments will run on for. The premiums and pay-out will decrease each year so as to sync in with your mortgage.

I am young and healthy

Many people don’t think it is worth getting life insurance if they are young but remember that the earlier you get it, the more affordable it will be. Even if you do not think it is necessary to get life cover you may want to consider critical illness cover.

This is a policy that will pay out to you personally if you are diagnosed with an illness or disability which means you can no longer work.

If you’re dependent on your salary to live on this could be invaluable if you face difficulties later on in life.

Life insurance is a type of insurance policy that is designed to pay out a cash lump sum in the event of your death. This money can offer much needed financial support to your loved ones in a difficult time.

There are various different types of life insurance available including:

Term life insurance (family protection) which is the most well-known type of life insurance cover.

Mortgage life insurance (decreasing term) is another form of life insurance designed to help repay your mortgage. The amount of cover for your policy decreases as you repay your mortgage.

Critical illness cover pays out if you are diagnosed with a serious medical condition during your policy term.

Income protection is designed to replace your usual income if you cannot work due to illness or injury.

Whole of life insurance is a type of life insurance that is most often used for inheritance tax planning. These policies cover you for your entire life so the cover is very extensive but will normally cost more.

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Life insurance is a policy that is useful for most people in providing peace of mind and financial security to their loved ones in the event of their death. Deciding to buy life insurance is very personal choice but one we would say is always worth thinking about – especially if you have children or a mortgage.

Life insurance can help the people you care about pay for important expenses like:

  • Mortgage or rent payments
  • Funeral expenses
  • Cost of living
  • School fees
  • Repayment of debts

If you have mortgage life insurance and repay your mortgage early, you might wonder if it’s really worth keeping the cover. If you only wanted life insurance to cover your mortgage repayments, it’s possible you may choose not to continue with the policy or buying a new one. This is a completely personal choice but there are benefits to having life insurance even if your mortgage has been repaid (or you don’t have one).

  • Your family will have financial protection
  • You can use some policies for estate planning (to reduce the impact of things like Inheritance Tax)
  • Certain providers will offer their members extra rewards and benefits such as gym discounts

Many people choose not to have a life insurance policy, believing they are too expensive or not worth it. If you have a lot of savings or investments, you may decide this is enough financial security for you and your loved ones.

Life insurance can however be a cost effective way to ensure that your family receives the financial support they need in the event of your death. Your loved ones could receive a payout worth hundreds of thousands of £s which would set them up for secure future.

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Life insurance is designed to protect your family in the event of your death and prevent them from struggling financially if you were no longer around. Without your income and support, your partner or children could find themselves stuck with huge bills for things like funeral expenses or mortgage repayments if there is no financial support in place.

When should you get life insurance?

You can buy life insurance at any point in your life, in fact there are some policies designed for specific age groups (over 50s life insurance). It’s generally best to buy life insurance as early in life as you can, as it will usually be far cheaper.

Life insurance prices will increase as we get older, because our health tends to get worse so insurers will judge an older applicant as a higher risk of claiming.

Price Match Promise

If you’re not sure what type of life insurance would be right for you, it’s always helpful to do some research and think carefully about all your options. There are a wide range of insurance providers available in the UK so there are some great options available. There should be at least one or two providers able to offer you the right policy at a fair price.

For more help and support, you can speak to one of our friendly life insurance experts. We can compare policies and prices across the market quickly and easily to make sure you always get the best deal.

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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Is life insurance worth it? - iam|INSURED

What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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Average cost of life insurance - iam|INSURED

What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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At iaminsured.co.uk, we believe in much more than just insurance policies; we believe that everyone is unique and should be treated with the fairness that they deserve. We also believe in providing the very best financial protection, and giving you peace of mind to continue with your busy life without the stress or worry of what might happen.

We are dedicated to providing the best outcomes that we can and access to the best insurance solutions in the way that our customers want or need. We understand that everyone is totally unique in how they want things done and their own individual circumstances, which is where our totally unique approach to financial protection is driven from.

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With nearly three decades of expertise and established with a commitment to excellence in everything that we do. We have been a trusted partner for thousands of families, individuals and businesses, all with one common goal of looking for the best protection solutions.

Our Mission: To provide easy access to fair pricing, affordable protection and the very best financial security to families and individuals. We are dedicated to offering comprehensive insurance solutions that safeguard the well-being of our policyholders. Guided by integrity, transparency, and a commitment to excellence, we strive to empower consumers and families to face the future with confidence. Our mission is not just about policies; it's about protecting dreams, ensuring legacies, and being a trusted partner on life's journey.

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