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Is life insurance worth it?

When thinking about whether or not life insurance worth it, you should really be asking yourself ‘what would happen to your family and your dependents if you died?’. This can be a scary thought for a lot of people and something that most of us don’t really want to think about, especially parents with young children. The harsh reality is that we don’t know what’s around the corner and it’s good to be prepared for every eventuality, even the worst scenarios.

Life insurance is generally the cheapest and easiest way to protect your family financially if you were to die. Your loved ones would receive a cash lump sum to help them to manage in the future if something happened to you which meant that you wouldn’t be able to provide for them.

It’s understandable to ask whether life insurance is worth it, especially if you’ve never taken out life cover before. Lots of people are put off taking out life insurance for several reasons, including:

  • It’s too expensive
  • It won’t pay out
  • It won’t cover me because of my health or medical history
  • I don’t really need it
  • I’d rather save and put money away

In this section we’ll look at life insurance in detail and answer all of the most common questions that people ask before taking out life insurance. We’ll also think about all of the potential barriers that might stop you from thinking about taking out life insurance and common myths.

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60-Second Summary – Is life insurance worth it?

The most important thing to remember when thinking about life insurance is whether anybody in your family would suffer financially if you die. This is never a nice subject to think about, but it is important to make sure that your family are financially secure and looked after if that day ever came.

  • Life insurance pays out a lump sum on death to your family or dependents to help them to cope financially in the future
  • If your family would be financially worse off without you, then you should seriously think about life insurance to protect against this situation
  • Every 22 minutes a child under 18 loses a parent in the UK on average, approximately 23,500 per year
  • Martin Lewis of MoneySavingExpert.com also strongly recommends that parents should have life insurance
  • Life insurance also pays out for suicide and will not exclude any pre-existing medical conditions

In reality the name life insurance doesn’t actually do it justice or explain what it actually does. We suggest that it might be better to be called something like family insurance or family protection cover. Effectively, life insurance pays out a lump sum to your family on your death which is to help them financially in the future and we feel that this is extremely important.

Life insurance is actually extremely affordable and usually a lot cheaper than people think in reality. You can get life insurance from as little as £5 per month and it provides financial security for your whole family if you die.

Age (at point of application)£200,000 life insurance over 25 years (non-smoker)*£200,000 life insurance over 25 years (smoker)*
20£4.46£6.77
30£7.55£12.67
40£14.24£31.30
50£35.31£92.49

*figures quoted above were based on our extensive research of the market as at 25/09/2023 for £200,000 of level term life insurance (family life insurance) based on no pre-existing medical conditions.

The average cost of life insurance in the UK is £38 per month for £152,000 according to a recent survey. Monthly payments for life insurance can also vary significantly between providers and you can save money by shopping around and speaking to a life insurance expert.

Life insurance helps to cover the cost of important expenses such as funeral arrangements, mortgage repayments and more. You can apply for different types of life insurance depending on what is most important to you to protect. One specific type of cover is mortgage life insurance which is designed to repay your remaining mortgage balance in the event of your death.

In a recent survey, a group of adults in the UK were asked how much they thought that monthly life insurance premiums would be, on average life insurance premiums were four times cheaper than they had suggested.

Life insurance premiums are based on:

Birthday cake image

1) Age

Life insurance premiums are lower when you’re younger and it’s always cheaper to get life insurance earlier so don’t put it off.

It’s generally best to take out cover as young as possible for a longer period.

A pile of £ notes

2) Amount of cover (£s) and term

Amount of cover and term will always cost more so make sure that you’re reasonable with expectations so premiums are affordable

Think carefully about how much cover you need and how long you want to be covered for when considering pricing.

A heart and stethoscope

3) Health and medical history

Health and pre-existing medical conditions mean that people will often pay higher premiums if they have certain health or medical issues

If you have a pre-existing medical condition such as diabetes, asthma, epilepsy or MS then this can cause higher premiums for life insurance.

A hand holding a lit cigarette

4) Smoker status

It is a well-known fact that smoking causes certain health risks such as an increased risk of lung cancer.

Smoker and non-smokers are also a standard area where life insurance premiums will vary and smokers can pay up to triple non-smokers rates

Ultimately, if you think that life insurance is too expensive then you should consider whether you feel it’s important or not. Life cover is totally down to personal preference and so it should be something that you take out by choice and not because it’s mandatory.

One of the biggest myths about life insurance is that it won’t pay out if you or your family needs to make a claim. In reality, life cover has one of the highest pay out rates of all types of insurance such as home insurance, car insurance, travel insurance etc.

Life insurance pays out 98% of claims on average.

Most of the main life insurance providers in the UK will release their claims statistics every year, so you can see the numbers for yourself. Below are the latest claims numbers from the main life insurance companies for your reference.

Insurance ProviderClaims payout rate (%)
AIG98%
Aviva99.4%
Legal & General96.7%
LV=97%
Royal London96%
Vitality99.6%
Zurich98%

*figures shown above are accurate as at 25/09/2023 and have been extracted from each of the insurance providers websites.

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Not only does life insurance cover people with pre-existing medical conditions, it also doesn’t exclude any historical health problems. It is a common misconception that life insurance won’t cover people with medical problems or health issues.

TOP 3 life insurance pre-existing medical conditions

1) Diabetes – if you’ve been diagnosed with type 1 or type 2 diabetes then you can get life insurance as long as your Hba1c readings are less than 14 (approximately). Currently you can’t get critical illness insurance or income protection insurance if you have type 1 diabetes.

2) High BMI (Overweight) – it is common for people to disclose high BMI (e.g. over 30) on a life insurance application form. This is not usually an issue and you should be able to get a life insurance policy with a BMI of up to 50.

3) Mental health – more and more people are disclosing mental illness (e.g. anxiety, depression, stress, Bipolar etc.) on their life insurance application forms. Insurance providers are becoming increasingly understandable about mental illness and premiums are getting more affordable.

There are hundreds of different pre-existing medical conditions that people can disclose on their life insurance applications (e.g. Cancer, Heart Attack, Stroke, MS, Epilepsy, Asthma etc.). You should be able to get life insurance with the vast majority of pre-existing medical conditions, depending on your symptoms and severity of your condition.

If you need life insurance with a pre-existing medical condition then you can save money every month by speaking to a specialist. A medical life insurance specialist will know which insurers offer lower premiums for your circumstances. For more information you can speak to one of our team on 0800 009 6559 or CLICK HERE.

Nobody actually needs life insurance but it is certainly sensible or advisable for people with dependents and families to protect. Martin Lewis strongly recommends that you should take out life insurance, especially if you have children or dependents.

TOP 5 reasons to take out life insurance

1) To protect your children if you die (e.g. bills, clothing, school fees etc.)

2) Pay off your mortgage for your family

3) Pay funeral expenses and other related costs

4) Clear major debts and credit commitments

5) Leave a legacy to your family

Life insurance is designed to give you peace of mind that your family are protected if you die. There are lots of different ways to use your life insurance pay out so you can decide how much you need and what you want to use it for.

Before applying for life insurance, consider the level of cover you need, policy term (e.g. 30 years) and type of policy (e.g. single or joint life insurance). This will help you narrow down your options and save time later on.

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One of the common reasons why people don’t take out life insurance is because they think that they can save money instead. It’s often something that people consider as an alternative to life insurance if they think it will be a better option.

It is personal preference and down to individual choice, but here are some risks with savings over life insurance

1) If you die too soon – the biggest risk is if you pass away within the first several years of saving then you won’t have much saved

2) You might need the money – if you experience financial difficulty then you might need to use the money that you have saved and leave a shortfall

3) Savings will never perform better than life insurance – most savings accounts are between 3% and 6% so you’ll never outperform life insurance returns with savings

There are a number of risks when using savings as a substitute for life insurance so you need to think very carefully about this.

It’s a good idea to do some research and compare life insurance quotes before buying a new life insurance plan. Think carefully about your personal circumstances and how much financial support your loved ones would need if you were no longer around.

The best way to compare the best life insurance rates and to find the lowest premiums is to get proper advice from a specialist. There are lots of options and you can save money by shopping around to find the best rates from the top insurance providers.

If you need proper advice then you can speak to one of our life insurance experts to get the best rates on 0800 009 6559 or CLICK HERE.

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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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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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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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