What is life insurance?

  • Help protect your family & home
  • Term & lifelong options available
  • Sum assured up to £1,000,000
  • Protection to suit every need
  • Cover from 20p-a-day †
Life insurance summary

Life insurance is a type of policy which provides your loved ones with a cash pay out if you were no longer around.

There are various types available to meet differing needs and the cost of each policy will depend on your individual circumstances.

Making a claim is a simple process and the pay out can be used by your loved ones for whatever they wish.

What is life insurance and why is it important? Find out all you need to know, watch our short video.

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Why do I need life insurance?

Life insurance is essential to help secure your loved one’s financial future if you were no longer around to provide.

If the worst were to happen to you, could your family:

The proceeds from a life insurance policy can be used to help towards many different aspects of life.

How does life insurance work?

Life insurance involves making monthly payments (known as premiums) to an insurer who will pay out a cash sum if you pass away while the policy is in place.

The value of the pay out received will depend on the type and level of life insurance cover you arrange at application.

Depending on the type of life insurance you have in place, it may expire within a set period of time, (known as the term).

In this instance, if you do not pass away within the set term, no pay out is made. However, there are life assurance options which guarantee to pay out.

For more information read our in-depth article on how life insurance works »

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What are the main types of life insurance cover?

There are a variety of life insurance types each one tailored to meet a different need.

The policy that’s best for you will depend on what it is you want to protect.

Term-based life insurance

Level term life insurance provides a lump sum pay out upon your passing.

The value of this pay out does not change throughout the life of your policy making it ideal for helping cover an interest-only mortgage, living costs, replacing an income or leaving an inheritance.

In contrast, decreasing term life insurance provides a lump sum pay out but the value of this sum declines throughout the policy term, making it ideal for helping cover a repayment mortgage.

Both of these policies last for a predefined term and if you do not pass away within this time frame, the policy expires and no pay out is issued.

Life assurance

Whole of life insurance is a type of cover which lasts for the rest of your life and guarantees a pay out when you pass away.

This option tends to be well suited to those in later life who are in good health.

This is because if the policy is in place for a long period of time, it is possible to pay more into the policy than the sum assured.

An over 50s plan provides guaranteed acceptance for all UK residents aged between 50 - 85 with no medical information required.

As a result, it is ideal for anyone in this age bracket who is experiencing health issues, however, the maximum sum assured is significantly lower than other forms of life insurance.

Family income benefit

The final and less well-known type of life insurance is family income benefit (or FIB).

Instead of paying out a single lump sum, FIB will provide your loved ones with a tax-free monthly income for the remainder of the policy from the date you pass away.

It is ideal for helping replace a lost income to cover day-to-day family living costs.

Finally, it is possible to have multiple policy types in place if required.

What does life insurance cover?

Generally speaking, life insurance policies cover all manners of death.

Regardless of whether death occurred as a result of an accident or natural causes, it is possible for a valid claim to be made.

Although, occasionally, there are time frames for which a policy must have been in place before a claim can be made, (for example policies that cover suicide may not pay out if death by this cause occurs in the first 12 - 24 months).

Policies that cover suicide will also include a suicide clause of 12 - 24 months. This means that the life insurance policy is invalid if death occurs as a result of suicide within this time frame.

What can a life insurance pay out be used for?

The pay out received from a life insurance policy can be used for whatever the beneficiaries deem fit.

Typically, this includes helping:

  • Pay off the mortgage
  • Clear any outstanding debt in your name
  • Cover funeral costs
  • Fund day-to-day living costs
  • Provide an inheritance
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How much is life insurance?

At Reassured we provide life insurance policies from just 20p-a-day.

Although, the exact cost of life insurance is dependent on each individual applicant.

Life insurance premiums are calculated based on the risk to the insurer, taking into account:

  • Age
  • Health
  • Smoking status
  • Lifestyle
  • Pay out amount (sum assured)
  • Type and length of cover

The underwriting process will determine the level of risk you pose to the insurer and price your premiums accordingly.

Those posing a higher risk to the insurer will pay a higher premium for their cover.

The table below shows example premium prices of some popular policy types.

Quotes are based on a non-smoker, in good health, with a 20-year term and £100,000 of cover:

AgeDecreasing term cost per monthLevel term cost per month
20£3.50£3.59
25£3.50£4.34
30£3.85£4.38
35£4.50£5.63
40£5.39£8.12
45£7.61£11.67
50£11.20£17.26

What is the average life insurance cost per month?

The average cost of life insurance in the UK is currently £38.15 a month*, according to internal research carried out by Reassured.

We calculated this average premium price from 142,576 term life insurance policies, sold between 08/09/21 - 08/09/22 with an average sum assured (cover amount) of £151,972.

Factors such as the age of those who have life insurance in place will influence this average cost.

The actual cost of your policy will depend on your personal circumstances, taking into account the aspects mentioned above.

The table below shows the average cost of life insurance for some policy types:

Level termDecreasing termWhole of lifeOver 50s plan
Average premium cost£38.23£38.07£178.30£29.65

How much life insurance do I need?

The amount of life insurance you require will depend on what it is you are looking to protect.

For those looking to cover a mortgage alone may only require the outstanding value of their mortgage.

Whilst those with a mortgage and children may need to take into account this balance plus how much their dependants will require until they are financially independent.

Taking into account all the aspects within your life you are looking to protect (mortgage, dependants, funeral costs, inheritance) will allow you to determine exactly how much cover you need.

It is also possible to change the amount of cover you have in place without the need for additional underwriting by invoking a special events option^.

This allows you to increase your cover amount if your circumstances change, such as buying a bigger house or having more children.

Whilst your premiums will increase to accommodate for the new cover amount.

How much life insurance do you need?

Find out how much life insurance may be right for you by using our simple calculator. Fill in the costs you would like your policy to cover.

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£121,687 is the estimated average outstanding mortgage per household in the UK.

Our property is generally the largest financial commitment any of us will make.

Your life insurance should cover this significant debt should you no longer be around.
£
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According to Money Advice Service, full-time childcare in the UK now costs £242 a week.

The loss of a parent could result in the need for additional childcare whilst the surviving parent increases their hours to account for lost income.

Your life insurance cover should factor in this additional required outgoing.
£
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The average level of debt (minus a mortgage) in the UK is £15,385.

Factoring in any outstanding debts in your name when arranging life insurance ensures this burden is not passed to loved ones.
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You may wish to leave your loved ones an inheritance or lump sum gift upon your passing.

Factoring in the gift amount when arranging your cover will ensure the pay out amount will be sufficient to provide your loved ones with this selfless gesture.
£
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According to SunLife, the average cost of a UK funeral is now £4,417, whilst the total cost of dying is £9,493.

This is a 130% increase over the past 16 years and shows no signs of slowing down.

A significant cost which should be factored into the amount of life insurance you secure.
£
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If you are one of the 65% of the UK who are lucky enough to have savings, this could be used as protection if you were to pass away.

Any pay outs from existing life insurance policies and investments can also be used as financial protection for your loved ones if you were no longer around.

Factor this into your required cover amount.
£ -

Your total cover estimate

£ 0

Let us find you our best quote.

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What happens if I outlive my life insurance?

Unfortunately, with term-based life insurance, outliving your policy will not result in a pay out being issued.

With regards to whole of life assurance and an over 50s plan, it is not possible to outlive your policy as cover lasts for life.

If you choose to end these policies or stop premium payments, cover ceases and all premiums paid in to date will be lost.

When should I think about getting life insurance?

Life’s big events tend to spark the thought of arranging life insurance.

Such as:

  • Obtaining a mortgage
  • Getting married
  • Having children
  • Losing a loved one

These are all good reasons to get life cover in place should the worst happen to you.

Even if you’ve not yet experienced a major financial change in your life, it could still be sensible to secure cover now.

This is because life insurance premiums are typically cheaper the younger you are.

Simply contact our award-winning team today and start your journey to secure your loved ones' future.

Is life insurance a good idea?

Life insurance is vital for anyone with dependants but who don’t have enough savings in place to cover their loss.

This could be children, a partner or other family member who either rely on your income directly or who would rely on the value of your estate to cover the mortgage or outstanding debts in your name.

For anyone in this position, it is essential to have life insurance protection in place.

Life insurance may also be beneficial for anyone with significant savings as a means of covering inheritance tax.

The policy could be written in trust which can avoid/minimise inheritance tax.

The pay out could then be used to help cover the shortfall of inheritance tax your loved ones will have to pay on your estate.

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Impaired life insurance

Occasionally, applicants will be denied life insurance due to poor health or a pre-existing medical condition.

At Reassured, we have a dedicated team of impaired risk life insurance specialists to help with such applications.

So, do not be disheartened if your health is less than perfect and you’re unsure of your life insurance options.

Simply get in touch and our impaired team can help you find the cover you need.

How long do you need to have life insurance before you die?

As long as all the information you provided during the application was accurate, a valid claim can be made at any point while the policy is live.

If you pass away within the first two years of the policy the insurer is more likely to investigate, however they have a right to investigate a claim regardless of when you pass away.

This allows them to determine whether all the information was true at the point of application.

This process can be carried out by obtaining your medical records, autopsy notes and other forms of investigation.

Most policies also include a suicide clause of 12 - 24 months.

This means that the life insurance policy is invalid if death occurs as a result of suicide within this time frame.

However, for standard life insurance, regardless of whether death occurs as a result of an accident or natural causes, a valid claim can be made.

A final caveat to this is over 50s plans.

These tend to have a waiting period of 2 years whereby if death occurs due to natural causes within this period, a claim can not be made, (but all premiums paid in will be refunded).

Death as a result of an accident within this timeframe will result in a pay out.

Full disclosure is essential

When applying for life insurance, it’s important to be truthful and forthcoming when providing details about yourself.

This will ensure that you’ll receive the most accurate quotes and that the policy you take out is valid.

Providing false information or withholding information on your application form is called ‘non-disclosure’.

Any form of non-disclosure would invalidate your policy and your loved ones could be denied a pay out when you pass away.

Therefore, it’s essential to be completely open and honest when applying for life insurance.

Our staff are not here to judge and will be completely impartial with all information they receive.

Terminal illness cover as standard

All term life insurance policies arranged through Reassured come with terminal illness cover as standard.

This means if you are diagnosed with a terminal illness and predicted to pass away within 12 months, you can make an early claim.

This pay out can then be used to help fund things like private medical treatment, enable you to put your finances in order or to simply enjoy your final days with those you love.

Guaranteed premiums

All life insurance policies arranged through Reassured provide guaranteed premiums throughout your cover.

This means you never have to worry about the cost of your monthly premiums increasing during the term.

Compare life insurance, (find your best quote)

The type and cost of life insurance can vary significantly between different insurers.

Therefore, to ensure you receive a great deal, it is essential to compare quotes from multiple insurers.

At Reassured, we can compare quotes, saving you valuable time and money.

We can complete the application on your behalf, explain any jargon and provide you with all the information you need to make an informed decision.

And the best bit? Our award-winning broker service is fee-free to use.

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Sources:

^Please note, this may not be available on all policies/in all circumstances

*This information has been gathered from our internal sales data and is the average price of all term life insurance policies (both level and decreasing term) sold to our customers, of all applicable ages, over a 12-month period. The sum assured will vary. Data is correct as of 22/09/22

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